Date: 30/01/2023

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

Key Phrases: moral and intellectual crises, employment elasticity, Employment informality, Anganwadi, ASHAs, economies of scale, economies of scope, female participation rate, equal opportunities.

Why in News?

• News from Davos and Delhi has framed the moral and intellectual crises affecting Indian economic policies.
• In the first instance, speaking at a session at the World Economic Forum in Davos on India’s road to a $10 trillion economy, the Chairman of Tata Sons said, “For me, the three things most important are growth, growth, and growth.”
• In the second instance, a report from Delhi said that 150 homeless people had been removed from beneath a flyover by police who had been directed to clear the city of beggars ahead of various G-20 events to be held in the city.

Problems with employment:

• Job demand:
  • Our moral crisis is the pathetic attempt to cover up the declining employment elasticity of India’s shining growth.
  • Job creation has not kept pace with the demand for jobs. Moreover, most jobs hardly pay enough and have no social security.
  • While statistical debates continue about the number of jobs being created, to pin the unemployment problem on either the present or the preceding government, it is widely acknowledged that the Indian economy is not generating enough good jobs.
  • What has not been accepted though, as yet, is that the paradigm of economic growth and globalization, which Davos has been a megaphone for, and which Indian governments have followed, is a cause of the problem.
• Agriculture sector:
  • Conventional economics says that the productivity of the agriculture sector must be improved by using more capital-intensive methods and moving people out of agriculture and rural areas, into cities, and into manufacturing and modern services (such as information technology).
• Manufacturing and service sector:
  • Employment is also crunched because the organized manufacturing and service sectors are also employing fewer people per unit of capital to improve their own labour productivity.
• Employment ‘informality’:
  • The Indian economy’s problem, many economists say, is the large size of its “informal” sector and the small scale of its enterprises.
  • Whereas, around the world and in India too, innovations in business models are changing the forms of large enterprises and creating more informality of employment.
  • Employment in the formal sector is also becoming informal with outsourcing, contract employment, and gig work.
  • Concepts of “economies of scale” are changing to “economies of scope”, and enterprise forms from concentrated to dispersed units.

Confusion in employment policies:

• Further confusion in India’s employment policies is evident with the concern of economists about there being too few women in the workforce.
• With more women in the workforce the economy would grow faster, say economists. This distorted view of the economy ignores reality.
• More Indian women have been working outside their homes to earn money than in any other country perhaps.
• For centuries, they have worked in large numbers on farms, as caregivers and domestic workers in others’ homes, as municipal sweepers, and as weavers and producers of handicrafts in small enterprises.
• They are also employed as teachers and as Anganwadi and ASHAs (Accredited Social Health Activists) providing essential services to communities.

Women participation:

• The essential services that women provide to society (including mothering and family care) are not considered productive work for the economy.
• Their work is not valued and they are paid too little. Instead, they are being pulled into the limited jobs the formal economy offers to increase GDP.
• Pushing more women into the formal economy will improve the “female participation rate” in the formal economy and may add to GDP too.
• However, it will not solve the basic problem — which is that the formal sectors of India’s economy cannot generate enough good jobs to meet the needs of India’s 1.4 billion population, now the largest in the world.
• Young men need jobs too and unlike women who may be respectably engaged in-home care, the men are idle.
• Increasing numbers of young and underemployed males are leading to more crime and violence, and sexual assaults of women in Indian cities.

Downside of GDP growth:

• Growth of GDP is like a disease. It kills the economy’s natural and social hosts. Natural resources are converted into commodities to feed the economic machine.
• Nature is re-engineered for more GDP growth — more dams, more roads, and even more tourists in the Himalayas.
• Nature is reacting: ‘Don’t push me around so much,’ it says, ‘or you will suffer.’ Society is reacting too. Capitalism needs to reinvent itself.
• The paradigm of “growth, growth, growth” treats human society and nature as a means to its goals of producing more wealth for investors and more GDP.

The commodification of humans:

• Human work and intelligence are commodities for producing value for investors in capitalist enterprises.
• A platform service hiring motorcycle riders to deliver packages on time cares only about the efficiency of the work.
• Riders are extensions of their motorcycles paid only for on-time delivery. Their human needs (for safety, health, and sufficient income) only increase the cost of doing business. These are not concerns of the platform owner; the state must take care of them.

Conclusion:

• Growth of GDP is not the purpose of human civilization. India’s leaders must find a path to reach “poorna swaraj” — social, political, and economic freedoms — for all Indians.
• Economic growth must create equal opportunities for all to learn and earn with dignity and not harm the natural environment that sustains all life.
• Increasing GDP with more investments is easier than changing the shape of the economy to make it more inclusive while increasing its size.
• A new paradigm of economic science and policy is required, the development of which has become essential for humanity’s survival in this millennium. India should lead the way in the G-20 and beyond.

Source: The Hindu

Mains Question:

Q. “Economic growth must create equal opportunities for all to learn and earn with dignity and not harm the natural environment that sustains all life." Critically analyse the statement in the context of the 'growth paradigm' of Indian economic policies.