United Nations’ Economic and Social Commission for
Asia and Pacific (UNESCAP) too has similar projection about Indian economy,
which says in its report of Economic and Social Survey of Asia and the
Pacific-2014, "The economy is expected to enjoy stronger growth momentum of 5.5
per cent in the fiscal year 2014, underpinned by solid expansion in the
industrial and services sectors.”
At the same time, the UNESCAP report also
cautioned that the gap between the poor and the rich is growing in the
Asia-Pacific region and there has been an increase in income inequality in many
major economies including India, China and Indonesia.
The Gini coefficient - a measure of income
inequality - between early 1990s and late 2000s increased from 30.8 to 33.9 in
India, the report said.
Now the question is can Modi government’s economic
policies deal with the issue of inequality and narrow down the gaps?
After coming to power, Modi government announced
poverty alleviation, inflation control, promotion of agriculture, job creation,
infrastructure development, creating an atmosphere to ensure ease of doing
business as its priorities. The recent slogan of “Make in India” to give a boost
to the manufacturing industry and the campaign to mobilise investment for
realisation of it is nothing new from Modi as this has been the norm since
introduction of economic policies of liberalization, privatization and
Foreign direct investment (FDI), large industries
and Modi’s dream of smart cities may not get the economy to the right track
because they would require more land which would rather have serious impact on
As a result, indigenous communities and people
living in rural and forest areas will be displaced and marginalized with greater
impunity. Small farmers will face the brunt and there will be distress
migration. Environmental laws shall be compromised to promote industrial and
infrastructural development. There will be only some diluted regulatory
mechanism to govern the operations of corporate investors! Such policies are
going to increase inequality and widen the gap between rich and the poor.
As Nobel laureate economist Joseph Stiglitz
points, “Unfettered markets lead to economic and political crises. Markets work
the way they should only when they operate within a framework of appropriate
government regulations; and that framework can be erected only in a democracy
that reflects the general interest – not the interests of the 1%. The best
government that money can buy is no longer good enough.”
“The rural poor’s expenditure increased 10.5%
while the expenditure of the rural rich went up 31.5%. At the same time, in
urban areas, the expenditure of the poor increased by 15.8% while the rich
experienced a growth of 29.1%. So, the gap within the rural poor and rich and
urban poor and rich is increasing, which could be a cause of concern for the
government pushing for ‘inclusive development’,” says India Spend, the pioneer
of data journalism in India, on basis of data produced by National Sample Survey
“Any economic model that does not properly address
inequality will eventually face a crisis of legitimacy,” says Nouriel Roubini,
professor of economics at New York University.
This is a point Modi government and its think
tanks have to ponder upon!
To narrow down the gap, the government needs to
promote policies, which would safeguard the financial interests of the poor in a
globalized market. While FDI and large industries are required to boost
manufacturing sector and create job opportunities, farming as an economic
activity, agricultural exports, natural resource based industries in rural India
are equally essential to ensure economic growth of the deprived rural
communities and to deal with the issue of inequality between rich and the poor.