Date : 11/02/2023

Relevance: GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Key Phrases: fifth-largest economy, Centre for Economics and Business Research, West’s self-interest in India, investment opportunity, ecological insecurity, unemployment, employment policy.

Why in News?

• The Budget that was presented recently, has received almost universal praise in the English language media.
• Some view the budget as pro-growth, which is supported by the data showing a 50% increase in private investment plans in the first nine months of the year.
• India's economy is growing, but the focus should not only be on income but also on other factors in evaluating an economy.

Growth targets:

• In 2019, India proposed a target of $5 trillion within five years (2024-25) for its economy. As the date approaches, it is clear that the goal is unlikely to be met.
• India has overtaken the United Kingdom to become the world’s fifth-largest economy.
• The London-based consultancy Centre for Economics and Business Research (CEBR) predicted that by 2035, India’s economy would reach $10 trillion and become the world’s third-largest by 2037.

The West’s self-interest in India:

• India is not only a relatively rare democracy in the east but also the largest one in terms of population.
• As all the countries in the West are democracies, western elites see a possible alliance of interests.
• India’s growing economic size has made it attractive in a way that it was not before.
• This is not as a market for goods though as the West’s manufactures are no longer alluring to Indians.
• But its fast growth is an investment opportunity for the surplus savings of the West.
• As a fast-growing economy, investing your money in India is likely to fetch you the highest returns globally.
• So, the continuous hum from the West about India’s growth reflects a deep-seated self-interest.

Employment security:

• Jobless growth:
  • Government data show that in mid-2022, unemployment among urban males was much higher than it was a decade ago.
  • Taking another approach to the problem, data from the private sector, namely Centre for Monitoring Indian Economy Pvt. Ltd., show that the number of people employed in December 2022 was less than it was in 2016.
  • The growth of the national economy has not generated equal growth in employment.
  • For the mass of the unemployed, concentrated in agriculture, employment opportunities will arise only when there is demand for goods in the production in which they can participate.
  • Growth of the IT sector or exportable manufacturers will not be of much use here as this is a cohort with low education and skills.
• Increasing Demand:
  • Increased demand for goods of mass consumption alone will lead to an expansion in the demand for these workers.
  • For an expansion of this demand, arresting the price of food would be essential, as only then will low-income households have enough to demand more manufactured goods. Instead, there is persisting inflation driven by the price of food.
• Need for employment policy:
  • Only a concerted policy focus can create the conditions for employment generation in India.
  • Currently, we do not have an employment policy, either at the Centre or in the States.
  • Welfarism, defined by the free or subsidised distribution of private goods, is no substitute.

Infrastructure push and ecological insecurity:

• In the continuing unemployment, it can be seen that growth does not guarantee the things we would aspire to in the economy.
• On the other hand, it can be seen that unbridled growth will almost certainly result in outcomes we would like to avoid, such as ecological insecurity.
• The frenetic building of new elevated national highways, implemented by riding rough-shod over local communities, often cuts a swathe through the countryside, destroying agricultural land and jeopardising livelihoods.
• State governments have not been far behind when it comes to encouraging disastrous geo-engineering projects.
• Plans for infrastructure aimed at religious tourism have found favour with formations as diverse.
• These are States that have only recently witnessed landslides and flooding, causing great suffering to their people.
• Across India, political parties seem to be pursuing growth to enhance their electoral prospects, without concern for a possible negative fallout.

Conclusion:

• India's focus on economic growth should not only aim at increasing its size but also at improving the standard of living for its citizens.
• To achieve this, it is essential that the growth generates employment and provides ecological security.
• This approach will not only help reduce poverty but also promote a sustainable and equitable society.
• The government and private sector should work together to implement policies and initiatives that promote both economic growth and social and environmental responsibility.
• By doing so, India can ensure a brighter future for its citizens and future generations.

Source: The Hindu

Mains Question:

Q. What steps can be taken to reconcile India's pursuit of economic growth with the need to generate employment and address ecological insecurity, especially in light of the country's poverty backlog?