Can ‘compassionate capitalism’ be the right mantra for effective governance in India?
As India enters it’s juncture of speedy infrastructural development and rapid economic boom a few vital questions still remain unanswered. Is the government pursuing the right developmental policy? Has India’s move from its socialist economic model in the 90s to a more capitalistic system subsequently been sympathetic to the mass population of the country or has it created more problems that it has solved? As the divide between the rich and the poor widens, rural poverty escalates, slums proliferate in urban areas and India battles a large throng illiterates and unemployed, one wonders whether its time to bring about a strategic change in governmental policy.
India today is battling the inevitable problem that a hardcore capitalist nation in its interim phase would. When rapid economic growth does not direct considerable diminution in poverty, improve living conditions of the deprived and creates a vast disparity in resource allocation, it is bound to give way to communal unrest and social upheaval. Studies show that inequality post the liberalization reforms in India has grown despite rapid economic growth, which means that while some have benefited from this policy change, its the Indian poor that is bearing the brunt. Experts say possible reasons for this could be the fall in the absorption of labor, a lack of demand for unskilled employment and concentration of jobs in the Industrial sector.
Another chief concern is the Indian government’s ineffectiveness in managing the agricultural sector. While India is primarily an agrarian economy, last year saw 1200 farmers committing suicides in rural Maharashtra and a number of children dying of malnutrition in Thane district, just a few kilometers away from Mumbai.
India figures among the higher end in the world inequality scale in terms of social and educational disparity. This directly affects labor absorption in the Industrial sector as it is only through education that labor could be effectively trained to face these technological changes. To ensure equal opportunity (apparently) the Indian government has just recently passed a bill in which quotas were introduced for socially backward classes in all private aided and unaided educational institutions. This which means merit goes flying out of the window and cast based discounts are fed irrespective of one’s economic status and intellectual ability.
What then is the solution to these predicaments? While it has long been established that adopting socialism is not an answer to the question, it is also gradually becoming clearer that embracing unregulated global capitalism is not the way out of these quandaries.
Founding chairman of Infosys, Narayan Murthi has an interesting premise to solving India’s difficulty. A self proclaimed Gandhian, but also a firm believer in capitalist values, he believes India needs to put into practice what he terms as ‘compassionate capitalism’ – capitalism in mind and socialism at heart. What he means is, the government should streamline its policy in such a way that while it enables private corporations to make enough profits, they will also have to ensure that parts of these profits are used to help the less fortunate in the society.
This he says can be done only through privatization of businesses and infrastructure, increasing agricultural productivity, de-licensing education and healthcare and introducing low tech manufacturing so that more and more people shift from agriculture to manufacturing thus intensifying productivity and employment in both sectors. Parallel to this the government needs to create an environment that encourages public – private entrepreneurship wherein the private sector can bring in maximum efficiency and monetary resources and the government can be an active regulator.
India today is battling the inevitable problem that a hardcore capitalist nation in its interim phase would. When rapid economic growth does not direct considerable diminution in poverty, improve living conditions of the deprived and creates a vast disparity in resource allocation, it is bound to give way to communal unrest and social upheaval. Studies show that inequality post the liberalization reforms in India has grown despite rapid economic growth, which means that while some have benefited from this policy change, its the Indian poor that is bearing the brunt. Experts say possible reasons for this could be the fall in the absorption of labor, a lack of demand for unskilled employment and concentration of jobs in the Industrial sector.
Another chief concern is the Indian government’s ineffectiveness in managing the agricultural sector. While India is primarily an agrarian economy, last year saw 1200 farmers committing suicides in rural Maharashtra and a number of children dying of malnutrition in Thane district, just a few kilometers away from Mumbai.
India figures among the higher end in the world inequality scale in terms of social and educational disparity. This directly affects labor absorption in the Industrial sector as it is only through education that labor could be effectively trained to face these technological changes. To ensure equal opportunity (apparently) the Indian government has just recently passed a bill in which quotas were introduced for socially backward classes in all private aided and unaided educational institutions. This which means merit goes flying out of the window and cast based discounts are fed irrespective of one’s economic status and intellectual ability.
What then is the solution to these predicaments? While it has long been established that adopting socialism is not an answer to the question, it is also gradually becoming clearer that embracing unregulated global capitalism is not the way out of these quandaries.
Founding chairman of Infosys, Narayan Murthi has an interesting premise to solving India’s difficulty. A self proclaimed Gandhian, but also a firm believer in capitalist values, he believes India needs to put into practice what he terms as ‘compassionate capitalism’ – capitalism in mind and socialism at heart. What he means is, the government should streamline its policy in such a way that while it enables private corporations to make enough profits, they will also have to ensure that parts of these profits are used to help the less fortunate in the society.
This he says can be done only through privatization of businesses and infrastructure, increasing agricultural productivity, de-licensing education and healthcare and introducing low tech manufacturing so that more and more people shift from agriculture to manufacturing thus intensifying productivity and employment in both sectors. Parallel to this the government needs to create an environment that encourages public – private entrepreneurship wherein the private sector can bring in maximum efficiency and monetary resources and the government can be an active regulator.
‘CAPITALISM WITH HUMAN FACE’ was the objective of Mikhail Gorbachev’s Perestroika in then Soviet Union in 1980s. It is still relevant today.
As far as the strategic policy planning in India is concerned the immediate target group according to experts should be the 320 million youth in the age group of 6 - 16 years, of whom 100 million fail to go to school and another almost 180 million become school dropouts. Studies show that nurturing of skilled workforce has not only increased productivity but also influenced considerably the location of investments in the growing liberal economies. Skills are of importance to people, as they not only create considerable access to increased employment but also result in social equity.
All of this although solely depends upon more transparency and accountability from the Indian government, without which a revolution seems just a distant dream. However with The Right to Information Act 2005 (Gives public access to government records) coming into effect and a vibrant new media emerging alongside, people have finally begun to see a ray of hope.
posted by Nikhil Inamdar at 12:40 PM
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