Thanks to the global meltdown Indian economy has been able to fight out the age old evil. Something which the best of the economic policies couldn’t achieve. Our finance minister Mr Chidambram can sleep in peace now… yes inequalities in income have been reduced, the gap between the haves and the havenots is shrinking, courtesy the impact of global financial crises on Indian economy.Guess how we’ve been able to achieve this feat ? Please don’t assume that the havenots have started gaining. They are not blessed enough to gain in the present economics structure. One-third of India's population (roughly equivalent to the entire population of the United States) lives below the poverty line and India is home to one-third of the world's poor people. According to the new World Bank's estimates on poverty based on 2005 data, India has 456 million people, 41.6% of its population, living below the new international poverty line of $1.25 (PPP) per day. The World Bank further estimates that 33% of the global poor now reside in India.
Then what has reduced the inequalities of income ? It’s the evaporation of the income from the hands of haves, it’s the decline in the purchasing power of the haves. So the poor has remained poor and he will remain at the bottom but the rich and the middle class is slipping down rapidly, thus reducing the inequalities of income.
To add to the woes of the rich and the middle class, their investment in stock market is evaporating every minute. The foreign institutional investors who had high hopes on Indian growth story are pulling out. Over the financial year 2007-08, net FII investment inflows into India amounted to $ 20.3 billion, and over the first six and a half months of the financial year 2008-09(April1 to October 16) FIIs pulled out $8.3 billion. But Mr Chidambram Indian investors are now keen to understand reason behind the over dependence on FIIs to push the scale of economic barometer and why their inflows were not used to increase the productive investment.
Though their is some consolation from the finance minister, as he reminds us every now and then that liquidity problem has eased out in the economy. RBI has infused Rs 1,85,000 crore into the banking system this month (October 2008). The bank are told to start lending, so that the borrowing increase and so does the investment and consumption. Not a bad idea Mr Chidambram ! this will also promote the credit culture, the price of which is paid heavily by the American economy right now. And we are surely on the path of the world’s largest economy, which has gone bust.
Then what is the solution to the problem, its simple, something which is forgotten in the complex economic scenario. We need to go back to the basics, the fundamentals of the economic principles need to be revised again and their in lies the answer to problems. “SWADESHI”
In an economy based on the principles of swadeshi, everything produced by the community is destined for local consumption. This means that production does not depend on market forces, only local demand, therefore pressure on the environment is minimal. External trade only occurs for those goods and services that the community is unable to produce. On the contrary, the nation states of our global economy attempt to maintain a favourable balance of payments by increasing the volume of exports, which necessarily leads to increasing production and therefore, the exploitation of natural resources. Gandhi especially emphasized the autonomous character of the inhabitants of these communities. In an economy of swadeshi, each individual is capable of generating his own work, is capable of using his own skills to produce something that will be consumed in the community. Self-sufficiency is therefore achieved at community, and not at an individual level.
All the best Mr Chidambram, its an election season our banks may not be doing well and banking reforms will surely be delayed but we hope to see good reserves for the vote bank and their reform must rule the center stage.
