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“Economic policies fuelling inequality”

THIRUVANANTHAPURAM: Economist Amit Bhaduri has said the economic policies being pursued by governments at the Centre and the States with emphasis on slow growth of regular employment, lack of adequate government spending in the social sector and direct resource transfers to corporations are fuelling inequality in the country.

Delivering a special lecture at the three-day international seminar on ‘Employment Opportunities and Public Employment Policies in Globalising India’ at the Centre for Development Studies (CDS) here, which concluded on Saturday, Prof. Bhaduri said that though the Centre had accepted the principle of right to employment with the enactment of the National Rural Employment Guarantee Act, the general economic policy framework in the country was resulting in slow growth of regular employment and greater inequality.

Over the past several years, both India and China had been growing at rates well above the world average. While it was true that this had resulted in reduction in absolute poverty to some extent, it was also true that there was a sharp growth in inequality in both the countries with India faring worse than China. It was a case of growing inequality reinforcing higher growth and higher growth reinforcing inequality.

Such growth was being fuelled first by efforts by large corporations to increase labour productivity while simultaneously cutting down on their labour strength. For example, the Tatas had increased production of finished steel by five-fold even while reducing their labour strength by half over the last 14 years.

It was the same story everywhere; that of longer work hours, less number of workers and sub-contracting.

Secondly, the government had gone in for liberalisation of the financial sector resulting in heavy inflow of funds from abroad and lack of adequate government spending on education, healthcare and social security.

Thirdly, the government had been transferring resources to corporations in the name of land acquisition and various incentives. This third strategy had met with resistance in different parts of India. Those who could get within the growth process were comfortable with the situation and the income of this favoured section was growing by 10-11 per cent. They were consuming luxury items and the price mechanism was also working to their advantage.

“It is a situation where you shut out the poor because they cannot produce the goods you need. This is where you cannot have employment,” he said.

Prof. Bhaduri said if the country wished to get out of this situation, it should give up its obsession with international corporations and go for the internal market, produce more goods and services that the poor needed and go in for greater decentralisation of powers to the panchayats where there was a greater representative population than was the case at the State or Central levels of governance.

K. P. Kannan, Member, National Commission for Enterprises in the Unorganised Sector, chaired the session.

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