|Until a decade ago, the idea of ‘inclusive growth’ was not making high-octane buzz in the Capital.|
According to the latest survey report of the National Sample Survey Organisation (NSSO), around a third of rural households and one-fourth of urban ones in India are indebted. Strikingly, the indebtedness spiked between 2002 and 2012 - where the average amount as loan for each family jumped seven times in cities and over four times in rural areas.
During most of these years, the UPA government was at the helm of affairs, which was known for pursuing the agendas based on underlying of socio-economic factors rather of sheer economic growth. The theory if translated for better reckoning of the UPA’s policies, would inform that it stood for an idea of ‘inclusive India’, but in real, the policy maneuverings simmered for not yielding any substantial mark.
Even in a more shocking revelation, the finding came out of latest NSSO survey is about the extreme inequality in ‘asset ownership’ between the rich and the poor. It shows the poorest 10 per cent owned assets worth as meager as Rs 291, while the richest 10 per cent in urban locales possessed asset averaged at Rs 14.6 crore.
Certainly, such pattern of inequality is alarming and counter-poses the weak spine of new growth pattern in India – otherwise claimed inclusive and resurgent.
Another stark proof also came from the cities where the average asset value of the richest segment was Rs 5.7 crore compared to Rs 2,507 for the poorest segment. Significantly, the inequality pattern in rural areas had greater variance in income disparities - profoundly for not having the same kind of asymmetric opportunities like cities.
The cities offer opportunities as well as ground for exploitation, much following the dictates of aggressive capitalism rooted through neo-liberal policies combined with indifferent or inefficient regulations. In such backdrop, the visible sign of inequality is largely linked with skill deficit and heavy automation of service functionalities – those clearly push a significant numbers of labour force to end up as cheap labour or grip through ‘disguised unemployment’.
In later case, the positive effects cease early with low supplementation of income from self-enterprise and low-paying jobs. Thus it makes sense that the average debt per family in cities hopped to Rs 84,625 in 2013, up from Rs 11,771 in 2002. In the rural areas, the average debt had in the same time period increased from Rs 7,539 to Rs 32,522.
In the last decade the urban housing has seen an unprecedented growth with growing urbanisation and consumption pattern, which led total 82 per cent of debt to finance housing, education and lifestyle – and merely 18 per cent on entrepreneurial activities. Effectively it ensures the urban housing boom to rest on the debt fundamentals – that is hardly risk averse in its extreme action.
The sub-prime crisis surfaced in the US housing sector with mortgage delinquencies coincided with the global economic recession – in backdrop of falling housing prices and growing demand with indifferences of housing loan return. The West lost many iconic banks including Lehman Brothers during those heady days, besides losing a culture of risk-centric banking. Indian housing market, though not in exact same scale, may enter into a situation where it will be giving already stressed banks, more reasons to be in business of risky loans.
Remarkably different, around 40 per cent of loans taken in rural areas are meant for business. There is no strong urge to ride on debt and quest as appears is for income enhancement. Here is potential of healthy growth.
The global economic scenario is no longer friendly to the emerging economies, as the western economies are signaling for their intention of pulling back the dollars from the distant land. This is basically to check the export-led growth plan of emerging economies, where they would have in comfortable position.
This signals restless time ahead for emerging economies, including India – where the domestic demand has to be leveraged as hedging option against the imminent unease at export mismatch and monetary fluctuations. The tendency for saving is likely to increase in Western countries with growing insecurity to sustain the current income.
India has to be in loggerheads at reducing the alarming inequality at its embrace – besides sustaining the income of working masses. Improving the overall business atmosphere would help while aiming the investment and growth – and on the consumption side, the domestic market needs to be targeted more by making imports of goods in limit as to boost the sick domestic manufacturing.
The praxis needs to permeate in favour of giving the idea of ‘inclusiveness’, a longing for final goal of making socio-economic disparities on check. The growth per se can’t be a panacea – neither moving away to achieve growth. The growth and inclusiveness has to be in same fold, but there is no clue any major shift is taking place in tandem with what is wishful. Beyond the buzz of growth and welfare, there is hardly any focus being laid on reducing inequality.
(Atul K Thakur can be reached at firstname.lastname@example.org)
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