Posted in Finance Articles, Total Reads: 1414
, Published on 09 October 2015
The question that I am about to address is indeed riveting and to a large extent subjective which is what makes it an area of perpetual debate. There lies a non-exhaustive list of issues to be discussed and hence I shall humbly try to put forward a perspective factoring in some selected dominant few.
India has been in a developing state of transition for quite some time now and it goes without saying that it has somewhat been able to catch the attention globally as the jury remains divided as to whether it would be able to make it to the so called desirable state of being called a developed nation. Being perceived as the fastest growing emerging economy (although the verity of the numbers behind the verdict remains under question), India has certainly raised the expectations of where it can take itself in the near future. However, the potential of realization of the idea of a developed India is perhaps far too utopian an assumption. In fact if I may take the question further to ask that “Is a developed India in its best interest?”
Arguably if one was to ascertain the biggest impediment to a developed India it would be the prodigious skewness in its income distribution. More significantly the already prominent inequality among the elites and the financially deprived is proliferating at an alarming pace. The result- the rich getting richer and the poor getting poorer. In light of the above mentioned it is only judicious to opine that a development-drive fuelled by appropriate policies and structural reforms shall not just be defeated in its purpose but is also detrimental to the colossal task of bridging the gap between the rich and the poor. This is unavertable as any efforts to bring in capitalist reforms aiding industrial growth would allocate greater wealth in the hands of people of influence and abundant resources and further alienate people who do not have access to it or who are not a stakeholder of the pursued change. A fitting reaffirmation to the above mentioned lies in the fact that income inequality in India has doubled over the past two decades with the top ten percent wage earners in 2011 earning twelve times more than the bottom ten percent which has improved on the same ratio that stood at six times in the 1990s. This makes India the most underperformed emerging economy on the planet in the considered parameter.
We often find ourselves to be in a dichotomy as to whether there is any credibility in all the criticisms and the pessimism towards the possibility of a developed India or is it wise enough to give in to the luring numbers that are often found buoyant in select media. Well, the reality that further worsens the prospect of this unattained feat is that the elected government and the bureaucracy (read an extension of the people in power, most of it if not in its entirety) are clever enough to dent the possibility of the electorate ever being able to come out of this state of perplexity. A testimony to this lies in the fact that according to the Central Statistical Office, one of the highest institutional authorities on all numbers projecting India, less than 30% of Indians live below the poverty line with the threshold set at Rs 32/day ($0.5) for rural India and at Rs 47/day ($0.73) for urban India (after having raised from Rs 26/day [rural] and Rs 32/day [urban]) as against the World Bank’s suggestive benchmark of $1.25/day (after having lowered from $2/day). If we go by the World Bank’s standards that should ideally be followed all across the globe, somewhere around 80% of Indians should be considered poverty-stricken. Is it then not appalling enough a fact that with 80% below the poverty line India still manages to contribute the third-largest number of billionaires to the planet?
India, an inherently agrarian economy, has seen its fundamentals erode to the extent that an occupation that accounts for close to 50% of the livelihood contributes a paltry 16% (approx.) to the Gross Domestic Product. This per se upholds how the economy continues to misplace its priorities there by showcasing a regressive trend that takes it increasingly away from its aspiration to become a developed nation. Even when it comes to consumption, the economic model is consistently frittering away its sustainability let alone compounding its progress since 1991, a period that marks the birth of a global India. To cite a case, fossil fuel consumption that includes coal, natural gas, petroleum and other liquids, has seen a voracious increase in consumption from 7 quadrillion British thermal units to 23 quadrillion British thermal units with an increasing dependence on import of the same from 15% in 1990 to 38% in 2012. This vociferously points out how domestic production capacity, although being revamped at a steady pace, has been completely outpaced by the energy demand of the populace. It further indicates that the country is in no position to sustain and feed the needs of a burgeoning population which is soon to become the largest in the world and that it is increasingly losing control over it.
Again, the situation is headed for the worse. Not only does this reaffirm the fact that we are backsliding but also implies that any move towards ushering in radically capitalist reforms to fuel an unfound and foolish aspiration to embrace the conventional idea of ‘development’ can actually denigrate the already struggling state of welfare (of course the minority wealthy class is an exception). The reason for the above mentioned is that with weak fundamentals and unaddressed issues ailing the socio-economic scenario that are imperative to establish a much required balance towards economic egalitarianism the step towards development can prove to be detrimental for the larger citizenry.
Source: cii & Source:eia
If we recall the path traversed by India in its 60 years of existence there has been many countries (South Korea, Singapore, etc.) who have risen from an underdeveloped state to well past where India is today. So, though painstaking the journey to development is certainly not impossible even in a relatively short period of time if there is sufficient weight thrown behind it. Then why has India not been able to come close to anywhere near? Or has it as the populist numbers suggest? After all India is the third largest economy (based on Purchasing Power Parity) in the world just after USA and China. Ironically, the above crown fails to diminish the fact that in the same India resides a third of the world’s poorest people (the highest for any country, according to the Millennium Development Goals Report 2014). A major historical challenge that India has failed to rid itself of unlike most other nations, who were at a similar stage or even worse at some or the other point in time and have gradually come out of, is the lack of unity among its people towards putting up a concerted effort in tackling some of the most daunting tasks that stares in the face of a fragile nation.
This crucial social factor of public apathy, though apparently farfetched, has had considerable economic implications. Among other ingredients of this issue at the heart of it somewhere a linguistically divided India, indifferent towards accepting a common language, has formed the root of a practice of refusing to equally recognize and associate with other cultures resulting in a lack of collaboration and coherence across communities. This has led to failure to collectively work towards any matter of public concern as also indulgence in self-fulfilment and such a temperament gradually seeped into the fabric of all functioning systems running the nation, be it political or bureaucratic or judicial or others. This has in turn bred inefficiency and rampant corruption.
Development cannot be gauged by the number of vehicles on a city road or by the ultra-modernity of a shopping mall in a metropolitan but by the magnitude of proportionate wealth distribution across income classes or by the extent of accessibility to the needs of a healthy livelihood among others. Unfortunately, India finds itself to be far away from being developed (in its truest sense) and given its present socio-economic fabric is not ready for chasing what the rest of the world calls the state of being developed. It should rather focus on addressing the fundamental concerns of its people that have long deserved attention before being competent enough to assert whether at all a developed nation is what it wants the world to see itself as and whether it is in the common good of all Indians.
This article has been authored by Somesh Chowdhury from IIM Shillong
1. Will India ever be a developed country- www.debate.org
2. Five reasons why India is an “ever” developing country- creative.sulekha.com
3. Let’s get this very clear. India is definitely a Third World (and slave) country- www.sabhlokcity.com
4. India is an RDC, a Refusing to Develop Country, thanks to its politicians- indiatoday.intoday.in
5. The Income Inequality Debate- www.cfr.org
6. 5 facts on Poverty, Inequality and Mobility- www.brookings.edu
7. India Has World’s Third-Largest Number of Billionaires- blogs.wsj.com
8. The 5 poorest countries in the world- https//in.finance.yahoo.com
9. India is increasingly dependent on imported fossil fuels as demand continues to rise- www.eia.gov
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