Principal Economic Adviser Sanjeev Sanyal, in an interview to a business TV channel, articulated that the Economic Survey lays emphasis on 'wealth creation', with due apology to the default stance of intellectuals calling for an equitable or socialist model of development. He also reminded that PM has earlier stated that only when there is wealth, it can be distributed.
The economic survey's stand seems to be a “mercenary approach” to wealth creation in place of a “missionary approach”, with "trickle-down" to the poor thrown in as a bait. India, by choice, has been a socialist economy where private sector and public sector, big and small industry co-existed and prospered together. A low-income country like India can not discard the socialist model of economic development which creates an Economy for Everyone.
The liberal model of American capitalism has proved to be ineffective in terms of reducing economic inequalities and promoting social justice.
Since 2016, the term Late capitalism or Late-stage capitalism is being used in the United States and Canada to refer to perceived absurdities, crises, injustices, and inequality created by modern business development.
Last five years of neglect of public sector enterprises, marginalisation of small and medium enterprises (SME) by sweeping formalisation of economy and a hastily implemented GST and a death-blow dealt to informal sector by DeMo, have already accelerated the wealth disparities in India disproportionately. Big industry is prospering but the benefits of "trickle-down effect" are not visible in the society at large.
The combined wealth of 63 billionaires in India is more than the total Union Budget of India for the fiscal year 2018-19 which was at Rs 24.42 lakh crore, as per the latest wealth report of OXFAM titled 'Time to Care'. The wealth disparities in a low-income country like India are more pronounced than the wealth disparities of the wealthiest country of world, USA. As of June 2019, the top 10 per cent in USA, held 69.4 per cent of the total US wealth, while in India, the richest 10 per cent own 74 per cent or three-fourth's of the national wealth. India’s richest 1 per cent of population hold 42.5 per cent of the national wealth, whereas the richest 1 per cent American households hold 40 per cent . This is ample proof that the "trickle-down economics" can not create prosperity for all in India. It has become a 'winner takes it all' case.
The "trickle-down" impact has been severely blunted in the backdrop of automation and formalisation of the economy. In the formalised Indian economy, only big industry is surviving. Big industry is being increasingly automated and in the process, very few jobs are created by the 'wealth creators'. When there are no jobs, there is no trickle down to labour. The other stakeholders in the supply chain or market place like ancillary industry, SME suppliers, small traders, etc. have all lost their bargaining power with the might of big industry. So, there is also hardly any trickle-down happening to other marginal players of the economy.
We need an economy for everyone and not a trickle-down economy.
(V Venkateswara Rao is a retired corporate professional and freelance writer.)