Can Someone Explain The Many Puzzles and Paradoxes Of the Indian Economy — Springfields of Rejuvenation
There are many puzzles and paradoxes at the heart of the Indian Economy!!
For instance, if the Indian Economy is growing so fast and so much, why does the common person feel so screwed?? From Petrol and LPG to the galloping food and medicine prices, the unaffordability of many consumers and for that matter, even basic and essential items for everyday use, the Aam Admi feels the pinch of this runaway inflation, which reduces disposable incomes and eats into savings, as well as burdens households with debt.
Next, India is home to the world’s largest cohort of young people, and people of working age, the advantage of which is referred to as the Demographic Dividend. Indeed, there was a time when economists were gaga about how India with its youthful population is better placed, say when compared to China, which due to decades of draconian One Child policies, became an ageing society.
However, if this Dividend really exists, why are so many Indians unable to find jobs, and worse, are exiting the workforce altogether?? For instance, recent data from CMIE (Centre for Monitoring of the Indian Economy) came out with data revealing that labour participation rates are at an all-time low. So, what is this paradox of aspiring to be a 5 Trillion Dollar Economy, where the jobless and the poor are increasingly taking to violence out of hopelessness and rage at the status quo.
Of course, the Stock Markets are Booming!! So, there is nothing to worry about and we can sip our Colas and eat Munchies, while we watch IPL. On the other hand, real wages are falling and wage inflation is being frowned upon. What is this paradox of dizzying market jumps and stagnating wages?? Is this because of widening gaps between the rich and the poor where the rich become richer and the poor become poorer?
Nothing to worry about!! The pandemic is responsible for the brakes on India’s growth story, or so we are told. Then, what explains the overdependence on governmental largesse a year after the last lockdowns? Is it because of the Informal Economy shrinking and causing unemployment and underemployment??
Is this the K Shaped recovery that former RBI governor, Raghuram Rajan, cautioned us about, when he talked about “bright spots and dark stains” leading to uneven gains, worsening inequality and exacerbating class divides? The bright spots are the Unicorns, growing faster than motorists on shiny highways, and the dark stains are pretty much all of us.
Perhaps, the Gig Economy would rescue us. However, in the absence of any formalization and regularization of the Gig sector, it has turned into a Wild West kind of landscape, with unclear laws and inchoate rules making matters worse for both Gig workers and consumers. Otherwise, we would not be talking about 10 Minute Deliveries or Freelance Writers cribbing about shady clients.
Fellow Gen Xers would remember the 1990s very well when some of these “puzzles and paradoxes” manifested themselves as India liberalized itself and opened up to the world. Indeed, I would go as far as to say that it is Deja Vu for me when I revisit that decade and find commonalities between then and now. However, India is turning inward, unlike then and so, it can cut both ways.
I would also caution about celebrating technology and investing too much in startups and Unicorns as it looks more than likely that this bubble is bursting. With global economic headwinds turning into gales and storms, caution and prudence are the keys here. All in all, I hope we can find answers to all these puzzles and paradoxes, lest we end up with social unrest.
Enjoy your weekend, everybody!!
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Originally published at https://rammohansusarla.in on May 7, 2022.