THE MORAL AND INTELLECTUAL CRISES IN ECONOMIC POLICIES

General Studies Paper 3

Context: Davos and Delhi have framed the moral and intellectual crises affecting Indian economic policies.

• Chairman of Tata Sons in the World Economic Forum said: The three things most important are growth, growth, and growth.”

Background of Indian Economy:

After Independence India’s strategy of development comprised four elements:

• Raising the savings and investment rate
• Dominance of state intervention
• Import substitution
• Domestic manufacture of capital goods

Reason for Economic reforms of 1990-91:

• Economic crisis of 1990-91.
• Model India had chosen was not delivering.

Moral crisis in employment:

• Cover up the declining employment elasticity of India’s shining growth.
• Job creation has not kept pace with the demand for jobs.
• Most jobs hardly pay enough and have no social security.
• The Indian economy is not generating enough good jobs.
• Organized manufacturing and service sectors are also employing fewer people per unit of capital in order to improve their own labor productivity.

Solution:

• Productivity of the agriculture sector must be improved by using more capital-intensive methods
• Moving people out of agriculture and rural areas, into cities and into manufacturing and modern services (such as information technology).

Problem of Indian economy:

• Large size of its “informal” sector and the small scale of its enterprises.

What is the current global scenario?

• 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
• Enterprise forms from concentrated to dispersed units.

Problems in employment policies:

• India’s formal sector cannot create enough good jobs.
• Too few Indian women venture out of their homes to earn money.

Role of Indian women:

• More Indian women have been working outside their homes to earn money
• Women have worked in large numbers on farms, as caregivers and domestic workers in others’ homes, as municipal sweepers, and weavers and producers of handicrafts in small enterprises.
• They are employed as teachers and as Anganwadi and ASHAs (Accredited Social Health Activists) providing essential services to communities.

Issues:

• 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.
• They are being pulled into the limited jobs the formal economy offers to increase GDP.

Way Forward

• Pushing more women into the formal economy will improve the “female participation rate” in the formal economy and may add to GDP too.
• Young men need jobs: As increasing numbers of young and underemployed males are leading to more crime and violence, and sexual assaults of women in Indian cities.
• 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.
  • Human work and intelligence are commodities for producing value for investors in capitalist enterprises.
  • The state must take care of its citizens.
• 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.
• 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.