ESSAY-Deleterious consequences of Globalisation on India

2014

The Indian growth process has witnessed two qualitatively different periods during the last three decades. First, in the 1980s, the Indian economy witnessed high growth with more or less stagnant inequality. Second, in the 1990s and later, the economy has tended to witness an inequality-inducing growth phenomenon. The major sources of inequality are - rising rural-urban gap (with rising agrarian distress), rising intra-urban inequality, rising inter-provincial inequality, and rising inter-class inequality. These internal processes have tended to also cause a growing instability in the economy through a lop-sided structure of aggregate demand. In this paper, I present a deeper analysis of the class and other structural factors that have contributed to the worsening of the distributional processes in the overall Indian growth story. At present, the effects of the worsening distribution are visible in terms of multiple crises that have begun to affect the Indian economy. The Indian sto...

India's Growth Story Since 1947 when Indian got independence, the governance focus has been shifted to socioeconomic development of the country and various measures have been taken by the government to eradicate poverty. The government had embarked on planned economic development to make use of the resources appropriately to alleviate poverty of the large number of people in the country. The economy was completely shattered by the colonial rule over a period of more than two centuries. The economic policies pursued by the colonial rule were aimed at development of home industry making totally India – a raw material exporting country. The colonial government made no sincere attempt to estimate and improve India's national and per capita income at institutional level. Though some attempts were made at individual level gave conflicting and inconsistent results. However most studies found that country's growth of aggregate real output during first half of the twentieth century was less than two per cent coupled with meagre half per cent growth in per capita output per year. Infrastructure development that took place in the form of railways, ports, water transport, posts and telegraph did develop. However the real motive behind this development was not to provide basic amenities to the people but to sub serve various colonial interests. The infrastructure development that took place during colonial rule did not focus at all in rural development and people in rural India did suffer grievously during natural calamities and famines, which further let them into abject poverty. By the time India got independence, the impact of two centuries old British rule had shattered the agricultural sector making the sector saddled with surplus labour and extremely low productivity. The agriculture sector continued to experience stagnation and deterioration despite the fact that the largest sector of Indian population depended on it for sustenance. Add fuel to the fire, the frequent occurrence of natural calamities, inadequate health facilities and famines further deteriorated the living conditions of the poor. After the independence Indian government had constituted planning commission to set objectives of the development aiming and focussing mainly on eradication of poverty with the equitable distribution of resource. The fundamental goals of planning commission through five year plans were growth, modernisation, self-reliance and equity. The ultimate objective is to bring distributive justice. It refers increase in the country's capacity to produce the output of goods and services within the country. It implies the productive use of resources – the inputs for the overall development of the country. A good indicator of economic growth is steady increase in the Gross Domestic Product (GDP). It is absolutely necessary for GDP growth as more people can enjoy the fruits of the economic growth and development. It is highly desirable that growth to GDP is contributed by different sectors in the economy – Agriculture, Industry and Services. In recent times India has grown fast not only compared to its own fast but also in comparison with other nations. Computations based on the world bank data indicates that India was ranking 90 in 1975, moved to 89 rank position by 1984, 80 rank position by 1994 and 75 position in 2004 and further improved its position by now. Though the country has been able to make impressive growth in terms of Gross Domestic Output (GDP), but the benefits of growth did not reach larger sections of the society and there is need to distribute the benefits of the growth more widely than has been done so far. The micro-structural changes

This paper is a detailed analysis of the course of inequality in India over the last three decades broken into three periods: the pre-reform period 1983-93; the first post-reform period 1993-2004; and the most recent period of 2004-11. The first part discusses the course of inequality of household expenditure per capita (APCE) from different points of view. It is seen that the post-reform decade registered quite dramatic increase in the relative growth of welfare in the top expenditure group—even as the poorest group increased its APCE at a rate higher than the mean. The dip in the middle of the distribution disappeared in the subsequent period when the “ladder’” pattern of growth was established with each quintile group having a higher growth rate than the previous. The major reasons for this changing pattern are discussed in terms of the structure of growth in the Indian economy, and particularly the development in the tertiary and manufacturing sectors. In Part two we turn to wage earnings. The wage distribution of regular workers showed the development of a U-shaped pattern similar to what is found in the recent history of some developed economies, and this “polarization” is probably more marked for wage earners than for APCE. As with APCE the phenomenon tended to disappear in the recent 2004-11 period particularly in the urban areas. The possible reasons for the polarization in the Indian context are discussed. The analysis of individual wage earnings also enables us to discuss important topics in labour market behaviour which we could not do with household expenditure data, notably the rates of return to education, and the relative importance of formality and education in the explanation of wage inequality.

2007