Increasing inequity

It can be said that a majority of the workers are struggling to fulfill their basic needs due to extre-mely low levels of income.

Recently, due to the reduction in the GDP's expected rate of growth to 4.9 per cent by International Monetary Fund (IMF) and constantly declining growth rate of industrial production, there is a talk across the world whether India is fast moving towards 4 to 5 per cent growth rate and would the nation be able to regain 8-9 per cent growth rate again. Many economists opine that the India is receding towards ‘Hindu rate of growth’.
It is to be noted that after independence, GDP of India did increase but on an average, our growth rate rallied between 3 to 5 per cent, and was termed as 'Hindu rate of growth'. This derogatory term was first used by an American-Indian economist Raj Krishna. Later it was widely being used as a general term for defining low GDP growth of India.

In the Ninth Five Year Plan, the average growth rate remained 5.3 per cent and during the Tenth and Eleventh Five Year Plan, it reached nearly 8 per cent, though during the last year of the Eleventh Five Year Plan (2011-12), it was only 6.5 per cent. In the first year of the Twelfth Five Year Plan when the growth in GDP is expected to be only 4.9 per cent, the concern of policymakers over the issue is obvious. In the last decade, India and China registered the highest economic growth. In the last couple of years, the GDP growth of both the economies has decelerated but the GDP of India has been worst affected.

The policy makers in India feel that the global meltdown is the reason behind the fall in the growth rate of India. They say that the economy of India has slowed down due to the recession in the European countries. Economists in the official circles are linking inflation to the rise in the price of crude oil in the international market. Whether it is price rise or economic slowdown, they do not seem to be in position to suggest concrete solutions.

If we try to examine the reason behind the economic slowdown in India, we find that constantly hiking of interest rates by the Reserve Bank of India (RBI), has not only resulted in the decrease in investment but the demand for consumer durables and houses too seems to have come to a halt.

If we ponder upon economic growth in the last decade, we find that the spread of economic growth of India has not been uniform. We find that though there is no fall in the number of people working in agriculture sector, yet the contribution of agriculture in GDP is constantly declining.

In the year 2000, the contribution of agriculture was over 25 per cent in GDP, which has now fallen down to merely 14 per cent. Ratio of urban and rural average consumption per capita was 1.62 per cent in 1993 which became 1.96 in 2009-10. The contribution of industries has stagnated, though the contribution of service sector has increased from 50 per cent to around 59 per cent. It is to be noted that only 25 per cent of the work force is engaged in service sector.

Low salaries

 From this, we should not infer that income of all the people working in the service sector has increased in the same proportion. In reality, most of the workers working in the service sector like in hotels, restaurants, retail shops, transport etc. have no choice but to work at extremely low salaries. Ten per cent of the people working in the service sector have excellent income. It can be said that where majority of the workers are struggling to fulfill their basic needs due to extremely low levels of income, only a few are able to reap the benefits of economic growth.

Not only there is an increase in unemployment but the quality of employment has also fallen. According to the report of the 66th round of National Sample Survey Organisation (NSSO), which was published last year, 250 lakh people are out of self-employment and in their place 220 lakh people have become casual labour. It means that farmers, small shopkeepers and people who used to run small-scale businesses have either become labourers or are unemployed. It may be interesting to note that the income of casual labour is around rupees 100 to 150 daily, with hardly any continuity of employment.

Data shows that in the beginning of the decade of 1990, the share of wages in total value added in industries was 40 per cent which came down to 34 per cent in 2010. In urban areas in 1993-94, the consumption of top 10 per cent of the population was 10.5 times more than that of the bottom 10 per cent of population, now this it has reached 14.5 times. In villages, this difference has increased from 7 times to 10 times. On one hand, there are a selected few like Ponty Chadha, who have a property of thousands crores, and on the other hand, there are crores of people who are earning less than Rs. 960 per month and Rs. 780 per month in urban areas and rural areas respectively, as conceded by Planning Commission.

The increasing inequalities in the country not only mean that there has been no improvement in the standard of living of the poor and that they are still living in poverty, in spite of economic growth but it is also causing a hindrance in the future economic growth.

The top 5 per cent people in India like capitalists, government officials, highly-educated salaried people and a few corrupt politicians have undoubtedly been benefitted by economic growth but the majority of the population has remained deprived of these benefits. They do have mobile phones in their hands but they do not have money to recharge these phones. According to the latest data, in June 2012 the number of mobile phone users was 93.4 crores but 25 per cent of mobile phones (24 crore mobile phones) were inactive.

Since there has been no increase in the income of 'mango people', the demand for industrial goods has also decreased. In addition to this, industrial production too has fallen down lot in the last one and a half years.

The middle class is under duress due to the increasing EMIs of their loans. It is important that the benefit of economic growth gets distributed equally and the society at large benefits.