‘Govt must create jobs to stave off economic crisis’

In an interview with National Herald, eminent economist Prof Arun Kumar says that masses must be weaned off the culture of freebies

‘Govt must create jobs to stave off economic crisis’


Prices of fuel, food, edible oil are on the rise. Despite this, there are no public protests. Is it not an issue for people, esp the middle class?

See, price rise is an issue, but it is not big enough to force the middle class to come out, to hit the streets. The middle class will protest if the Opposition organizes them. The poor don’t have strength to protest and are too involved in fulfilling their basic needs.

The middle class thinks BJP is protecting its interests. BJP has also divided people along religion, with Hinduization of the masses taking place.

Another big factor is the role of the media. The trade unions held a massive nationwide strike recently, but it was not shown by the media at all. Media is clearly being controlled by government and corporates. It does not want to show anything against government interest at all.

Do you see a Sri Lanka-like crisis happening in India?

The situation in Sri Lanka is grave. People are not getting food, fuel for days at end. They wait for 10 hours a day to get a liter of diesel...There is no paper, electricity etc. In India, the situation is not that bad, and I don’t see that sort of crisis happening here.

Sri Lanka is a very small country with a minuscule economy in comparison to India. We have enough stocks of food-grains and are self-reliant in food production. We have foreign reserves worth over $630 billion. Though fuel prices are going up, we do not have scarcity. The situation worsened in Sri Lanka because the Rajapaksa government made organic farming compulsory. This led to shortage in production of food grains. Also, due to the pandemic, the tourism sector was hit badly. Their foreign reserves went downdrastically. Corruption too contributed to the situation.

In a meeting with PM, some senior bureaucrats reportedly cautioned that freebies may lead to a situation like Sri Lanka in India…

It was just politics. They named only opposition-ruled states like Rajasthan, Chhattisgarh and Delhi whereas the problem lies mainly in UP, Bihar and Madhya Pradesh.

The second thing is that the Centre has put a cap on fiscal deficit in states; it can’t go beyond 3% of the total GDP of the state. But for the Central government, the limit is 7%-10%. Who is indulging in profligate behaviour? It is the Centre.

What needs to be done, according to you?

The World Bank is saying that money should be directly transferred to people who are suffering. Provide them with good education, good health.

Employment generation should be the priority of the government. If the government creates employment, money will be generated. They will spend the money as per their requirement. The government is giving them cycles, laptops etc but it is not necessary that they need what the government is providing.

Providing jobs will increase production. Increased production will increase the purchasing capacity.

Rahul Gandhi has time and again said that Centre should directly transfer money to people, and Congress had proposed the NYAY scheme. Your thoughts on it.

The NYAY scheme was proposed before the 2019 polls. Pitching for direct transfer by the World Bank should be seen in the light of the crisis of capitalism. How will the consumption increase if people do not have money?

In my view, providing money without a job is not a good idea. Free money does not give dignity and self-respect. Employment and dignity both are equally important.

The government should focus on employment intensive areas, but we are more focusing on capital intensive areas of the economy.

Rs. 110 lakh crore was announced for infrastructure in the Union budget. The whole money is going to capital intensive areas.We are constructing roads, highways and freight corridors. Earlier, hundreds of people would get jobs but due to usage of big machines, lesser people would get jobs. This will not create employment.

If the government invests in schemes like MGNREGA, it will be more helpful in job creation. Another sector where there is immense possibility of job creation is the health sector. In the post pandemic Budget, the government should have increased the Budget for the health sector but it remained Rs. 86,000 crore this year also. Increase in Budget for the health sector would have resulted in massive job creation.

Spending in the health sector does not mean training doctors only but also supporting staff, nurses, para medics, lab technicians. This sector has immense possibilities for job creation.

Another sector where the government should invest is education. Education sector can create a lot of employment. We need a lot of teachers and support staff. If the government spends money on education, it will create jobs but the focus of the government is on the urban areas.

(This was first published in National Herald on Sunday)

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