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Friday, October 31, 2008

The Concept of Inclusive Growth

Inclusive growth by its very definition implies an equitable allocation of resources with benefits accruing to every section of society, which is a utopian concept. But the allocation of resources must be focused on the indented short and long terms benefits and economic linkages at large and not just equitable mathematically on some regional and population criteria.Utopia it is because it dreams of an ideal state which we all strive towards. We still have trappings of an utterly violent prone tribal society where most of conflicts simmer for ages with no solutions at sight and yet we talk of an ideal state. Can we have the so called ideal state with so many criminals and people having no clue, sitting at top and making a huge mess of every thing they lay their hands on?As a nation still in the process of developing itself, it would perhaps be very premature to let go of the dream of inclusive growth but with some hard realities thrown in too. Society by its very definition implies coming together of a variety of peoples and sharing of benefits in order to survive and grow. But what we do of the people who are seeped deep in concept of zero sum game, where one has to win at the cost of other across whole gamut of economic activity? Any direct jobs to skilled people create direct and indirect jobs for people having complementary/down stream/associative skills. When thousands of people get job in IT/BPO sector many job streams are automatically created across wide spectrum of skills and locations. I do not understand aversion towards expanding job market for skilled people in IT/BPO sector. There is no economic activity, which is stand-alone and isolated from its immediate and external environment. In an expanding economy more people with wide skills are required. What will be educated people will do if there are no job opportunities when they pass out of schools and collages? I think this notion of berating any job creations because millions do not have access to primary educations is faulty to core. Please excuse me for being straightforward. The need to upgrade education across the length and breadth of country has been for long and there has not been much done about it in true sense. These are two separate issues and one must not be berated and criticized because of deficiency in other. The concept of few people monopolizing and restricting the entry of others is a faulty notion again based on mindset of stagnant economy and static society. In today's increasingly global, dynamic and competitive economy such notions are based on inherent failure to identify the skill/activity linkages present and missing in the real sense. I do not yet fully understand what are the real concept and objectives of the idea of inclusive growth, other than what it could be in the present scenarios?Off course there is scope for vast improvements and yet the trickle down effect is visible across country with few exceptions too. These exceptions are due to various regional, environmental, political and infrastructures deficiencies. Growth in a competitive economy is and will always be inclusive, because it cannot be other wise. But it is immensely fashionable to criticize and play down innovations in economy and hence the job market. The Eleventh Plan Approach Paper according to which a key element of the strategy for inclusive growth must be "to provide the mass of our people access to basic facilities such as health, education, clean drinking water etc, and that governments at different levels have to ensure the provision of these services". The question, which must be asked, is why previous ten plans could not make any significant differences in these areas and that too with so much of high-sounding ideas but with no substances of real value? That is the legacy of "high thinking-no action" socialism we have to bear with in the twenty-first century. Pyramid of economy and its jobs will always be initiated, activated by people having higher managerial and technical skills and their acts and risk taking abilities will create jobs for other people down stream.The proponents of "Inclusive Growth" have some vogue notions of growth and fail to see a vast change underway. Off course they fail to see any linkages between pyramid of resources, entrepreneurships, skills and jobs. Other day I was watching a discussion on TV, where one of the speakers was Swami Agnivesh. With due regards to his contribution in social life he has displayed his great fixations and penchant for utterly romantic solutions of such basic nature. For him the present growth has no meaning as vast numbers of people are out of its sphere. He wants bottom up growth mechanisms and not top down growth. They may be some exceptional examples of micro level development of what he so eloquently referred to.There is so much of noise about only the educated and skilled people getting employed and most remain uneducated and hence unemployable. What will be use of education if those boys and girls passing out of collages remain unemployed because there are so many who are uneducated? An entrepreneur friend of mine is a very harassed man on verge of going out of business due to rampant absenteeism of around 100 workers he employs. He is faced every day with angry customer's unprintable expletives due to delayed shipments of lower qualities leading to delayed payments and all associative problems. The manufacturing system he is comfortable with is largely manual with no automatic machines. To survive he has to invest in imported automatic machinery that would lead to cut down his labour force by 60% and increase production by 50% along with better quality. To operate these machines he would need to employ fewer technically educated/ skilled people at two to three times of the average salary paid right now. If he does that is he going against the concepts of "Inclusive Growth"? Will some knowledgeable people throw light on the issue?

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