In recent months, the government’s macroeconomic policy has acquired a new salience in the context of reversing the current slowdown.
Government approach –
- The policy currently being pursued is intended primarily to incentivise potential investors by facilitating ease-of-doing-business and making large-scale concessions to the corporate sector.
- In this context, the government is taking measures to ensure flow of foreign private capital and the progress of India in the ease-of-doing-business rankings.
- It is also focusing on making tax concessions to the corporate sector which are estimated at more than ₹1.40 lakh crore.
- The proponents of this approach advocate that the government should go further and implement other items on their reform agenda, such as labour market liberalisation and removal of constraints on acquisition of land for industrial purposes. However, they are not advocating investing in the human infrastructure such as health and education.
Increasing rural incomes –
- Abhijit Banerjee, a co-winner of the Nobel Prize in Economics, has been one of the few economists making a case for transferring income to the poor who are likely to spend the additional income to buy goods and services, an enhanced production of which offers the best chance for reversing the current slowdown.
- In this connection, he has singled out the mechanisms of the Mahatma Gandhi National Rural Employment Guarantee Act and direct income transfers.
Lack of investments in health and education –
- The fact that health and education are of instrumental value in driving growth, creating employment and improving people’s well-being is widely recognised but often forgotten when it comes to making investment in these sectors. Education has a crucial role to play for an individual in gaining employment and retaining employability.
- Health and education have been widely recognised as public goods. In most developed and several developing countries, these services are either provided or are heavily subsidised by the state.
- Unfortunately, in India, we find the opposite trend of the state withdrawing from the provision of these services and consequently their rapid privatisation. It has only destroyed public sector institutions, promoted greater inequality and pushed the poor out.
Way forward –
The gestation period of projects in social sectors is not as long as it is made out to be. After all, in the RTE Act, a gestation period of only five years was envisaged for universalisation of elementary education. It is therefore time for reprioritising education and health in the scheme of development strategy and the allocation of budgetary resources.
Source – The Hindu
QUESTION – The proponents of social equality argue that the economic slowdown present a good opportunity to raise rural income and ensure quality health and education in India. Comment.