An economic recession is bad news. A long-ish recession such as the one we’re experiencing now is far worse as feelings of uncertainty creep into our minds as the days go by. We look up to our government for a solution, but the best we find is a toss-up between growth and inflation, a hype over GDP, and promises of job creation.
In free markets like ours, entrepreneurship helps; but that too has to be funded for sustainability and growth. Banks can loan money only when the money supply is fluid and their ROIs are met. Consumers can spend only when they have money saved. And, printing more money (which is a government intervention) may only add to the inflation.
The question is, what can the government do to drive economic growth (which, in India, is happily hovering around 9% – way ahead of most other economies globally) and create wealth for everyone to enjoy?
In the illusion of boosting GDP, what the government in India seems to be doing is re-distributing existing wealth to the already-rich and the politically-favoured. The middle-class is experiencing some benefits, but the poor in India still can’t make a decent living. The existing economic divide seems to be widening further.
This has been true for India since her Independence, in spite of adopting a socialistic form of government. Although India has been Independent for close to 70 years now, she has failed to sustain her investment in developing the manufacturing sector, choosing instead to build the IT sector from the early eighties.
Manufacturing seems to be in focus now under the Narendra Modi government, but benefits may not accrue for another 10 or even 20 years. The Western World and a few Asian countries like Japan, China and South Korea which had invested in both manufacturing and IT for many years now seem to be on the brink of an economic collapse.
So, who can tell which strategy will work? Yes, innovation and entrepreneurship are important for India, and India may follow USA’s footsteps in building a significant economy from startups. But the venture capital available in the market today is not yet a significant portion of the total capital needed for India’s economic turnaround.
Image may be NSFW.
Clik here to view.
Image may be NSFW.Clik here to view.
