Roaring corporate sector and a booming economy!! But what about the last man standing on the street??

“20000 points on the sensex, the economy growing at 9% have a good weekend” wrote economic times on one Saturday. It is indeed great to have a booming sensex and it’s equally good to know that we are one of the fastest growing economies of the world. But does it end there?? Is a booming sensex and a roaring corporate sector all we want for our country, where millions of people still sleep on the road. In the history of our country this is truly one of the most important eras because on one hand we are the front runners in economic growth and global investments. In fact in the Presidential debate of 2004 between President Bush and Senator Kerry, Senator Kerry assured the people of America that if he becomes President then he will prevent American jobs from being “Bangalored” and sent to India where a booming IT sector awaits the best talent on the globe. On the other hand we are also known to be the front runners in mal nutrition and poverty and illiteracy. Do these people who are mal nourished and illiterate even know why their country is respected globally? They don’t, and why should they?? When the hyped growth and the boom that Economic Times raves about has not gone even remotely close to them.

Therefore the time has come when we need to make economic growth more inclusive. The current pattern of economic growth is only favoring specific sectors of the economy. And therefore people associated with those sectors are also benefiting. But the people who do not come under the purview of those sectors are experiencing stagnant growth. An article recently published in the Navbharat Times pointed out that the present government or for that matter any government has a tendency to start worrying about things only when a worrisome situation gets created. While the situation is gradually going from bad to worse they are indifferent. The economic policies being followed by the current government have undoubtedly increased foreign investment, boosted economic growth and made India one of the preferred destinations on the globe for any kind of business and financial activities. But at the same time as a result of all of this, the government is forced to reduce the fiscal deficit as per the terms and conditions of IMF and WTO. Reduction in fiscal deficit results in declining expenditure for essential services like health and education. According to the Kothari commission led by Dr Vijay Kothari in 1966 expenditure on education has to be minimum 6% of the GDP but for the last several years it has remained between 2.5% to 3.5%. In the eleventh plan it is estimated to be at around 4%. Recently it was reported the IITs don’t have enough funds to pay proper salaries to its professors. IIT Bombay made a request to the government to give a grant of 20000 crores, so it can look after its basic expenditure. This is one of the implications of reducing the fiscal deficit that even the premier institutes are down in the dumps. IMF tells our government to reduce the fiscal deficit to control inflation. According to an article on the Indian economy, when the government borrows money from the RBI it tends to increase the quantity of money and hence it results in inflation. This argument has two flaws one that the new quantity of money doesn’t chase the same goods conventionally perceived. While the quantity of money circulating in the economy increases the production and output also increases. But apart from these technical details and principles, it is important to note that if the government reduces its expenditures on health and education then any significant development for the masses is not achievable, and then it’s meaningless to merely float on the fact that sensex is on 20000 and economy is growing at whatever percent when it is of no consequence to majority of the population.

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5 comments on “Roaring corporate sector and a booming economy!! But what about the last man standing on the street??

  1. talk_india says:

    great point of view. As an IITian myself, I believe that IITs themselves are autonomous but the research is not enough to get substantial fundings. The Indian economy is doing well in certain sectors which focus very heavily on service and outsourcing areas. If we dont invest in R&D and other sectors the imminent slump in US economy will have a terrible ripple effect over Indian econmy as well.

  2. As it is said “When US sneezes the world catches a cold” The sub prime crisis in the US did initiate some crisis in the financial markets around the world.

  3. talk_india says:

    I didnt know that the effect is being felt already. Question, do you think finance jobs in India will also go down with this?

    BTW: I replied to your email. talkindiatalk.com is now Live. Hope you would join and write some of your great articles there.

  4. Well how exactly the financial system is affected is question which calls for much more research, but one point which the finance minister P Chidambaram made was that since India does not practice sub prime lending the consequences may not be very severe. The sub prime crisis affected the US housing market and eventually derivate market and this can have an impact on the indices of various stock markets of the world.

  5. Anshul says:

    aray bhai yeh toh main bachpan se keh rahaa hun bhai !!! Seriously … people call me a commie for writing the same thing in different words !!! [:d]

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