The moral and intellectual crises in economic policies

Source: The post is based on the article “The moral and intellectual crises in economic policies” published in The Hindu on 28th January 2023. 

Syllabus: GS3- Indian economy: growth, development and employment 

Relevance: Paradoxes of GDP growth 

News: The article explains the intellectual and moral crisis affecting the Indian economy.

What is the crisis of employment in India? 

Job creation has not kept pace with the demand for jobs. Moreover, most jobs don’t pay enough and have no social security. The paradigm of economic growth and globalisation followed by Indian governments is a cause of the problem. 

There is less employment because the organised manufacturing and service sectors are also employing fewer people per unit of capital in order to improve their own labour productivity. 

The Indian economy’s problem is the large size of its informal sector and the small scale of its enterprises. Employment in the formal sector is also becoming informal with outsourcing, contract employment, and gig work.  

Young men need jobs too. Increasing numbers of young and underemployed males are leading to more crime and violence, and sexual assaults of women in Indian cities. 

Concepts of “economies of scale” are changing to “economies of scope”, and enterprise forms from concentrated to dispersed units. 

How women’s participation in the workforce is not conducive to the employment scenario in India? 

As per economists, more women in the workforce will lead to faster growth.  

This distorted view of the economy ignores reality. More Indian women have been working outside their homes to earn money than in any other country perhaps.  

They are working in a) large numbers on farms, as caregivers and domestic workers, and weavers and producers of handicrafts in small enterprises, b) as teachers and as Anganwadi and ASHAs providing essential services to communities. The essential services that women provide to society are not considered productive work for the economy.  

They are being pulled into the limited jobs provided by the formal economy. Pushing more women into the formal economy will improve the “female participation rate” in the formal economy and may add to GDP too.  

However, it will not solve the basic problem related to the lack of enough good jobs in formal sectors of India’s economy for the young population.  

Why is the overemphasis on the growth of GDP not good for society and nature? 

The paradigm of “growth, growth, growth” treats human society and nature as a means to goals of producing more wealth for investors and more GDP.  

According to this paradigm of growth, the human needs for safety, health and sufficient income of workers only increase the cost of doing business. These are not concerns of the investors. The state must take care of them. 

What is the way forward for economic policy? 

Growth of GDP is not the purpose of human civilization.  

India’s leaders must find a path to reach “poorna swaraj” related to 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.