Friday, June 23, 2006

Modern Indian Economic Mythologies

Perhaps, every generation/era has its own set of mythologies and urban legends, which are mutually reinforced by the metropolitan conversations among the elites who have a voice... They define the "good" and "evil" in binary (fairy tale?) terms, which are comforting for those/themselves who find the grey areas of real-life uncomfortable to deal with/live in.

In our times, apparently, one of the myths is the huge economic utopia that the post-1991 liberalisation has created. With India's GDP sky-rocketing surpassing the erstwhile "Hindu Growth Rate" (notwithstanding the fact that GDP itself is a function of how it is calculated - another modern myth!), there are two myths that appeal to those who have "seceded from the society"

Myth 1: Liberalisation of Indian economy has unleashed a boom in employment opportunities

Unfortunately, the reality bites, and the figures do not match with the assumptions. The following figures are from the Planning Commission's database.

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According to Planning Commision, the employment rate fell down from 2.7% in the pre-liberalisation era to less than 1% post-1991

Myth 2: Pre-91/"liberalisation", Indian industrial/social infrastructure did not develop due to the anti-industrial policies of the "socialist economy".

Once again, the reality does not match the beliefs.

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Facts notwithstanding, the modern Indian myths perpetuate among the urban elites... reinforced by media, urban elites and government...


neeti said...

i will tell u honestly how i found your blog n u can decide if u can or want to help me.
you must be aware of the quota controversy in our country..i just think that increased quota is an eyewash...sidelining "real steps" to be taken to uplift poor n bc's.....what were the real steps..given by the planning commision...sidlined by the govt??

yasak said...

I will take just one number from the above table to make the point that socialism was detrimental to the Indian economy. First, the number of telephones was about 6 mn. in 1990-91. If you see a telephone as a basic necessity, not as a luxury item as it was seen in the pre-liberalization era, then this 6 mn figure is astonishingly low. I still remember the time we got a telephone at our home in the late 80s. I felt so privileged! This fact about the incredibly low telephone density works me into a rage whenever I am reminded about it.

The pre-liberalization era was perverse. It treated many basic items as luxuries and protected inefficient capitalists like Bajaj. I can't understand why you are defending it.

Madhukar said...

I am neither defending nor criticising, just sharing the facts as known.

To my understanding, there were many other "necessities" - providing gainful employment to people, having enough grains to feed people, building an educational and industrial infrastuctures, etc. - which preceded the necessity of providing phones to middle-class homes.

You may differ on these priorities - one is entitled to one's own preferences.

Supratim said...


You fall into your trap on the telephone issue. If feeding people was more important than putting in telephone lines, then what business did the govt have to put in 6mn lines anyway? And, if it did not have the resources to put in the required 60mn lines, then why did it act as the dog in the manger and not allow private cos to put it in, instead? That is the main criticism of the pre-liberalistion polices, especially the ones of the dark ages (1965-1982).

And, your facts and figures for infrastructure are meaningless unless you put in the comparative numbers for 2005. That will allow us to measure the growth % in the respective eras. As I have mentioned before, quoting absolute numbers is completely meaningless for real analysis.

Finally, your employment numbers .... I can not believe that total employment in the country has actually fallen since 1991. Anecdotal and production evidence clearly shows the opposite .... If those numbers were the complete truth, we would have had riots every year in every state. There is some "funny analysis" that has gone into that data .... probably a very funny definition of organised labour. And, who wants organised labour anyway? Unions are another dog in the manger. HA!