By Justice Markandey Katju–
(Justice Markandey Katju is a former Judge, Supreme Court of India, and former Chairman, Press Council of India. The views expressed are his own)
The Jaipur Literature Festival, which concluded on February 5, saw former Reserve Bank of India Governor and IMF Chief Economist Raghuram Rajan prescribing that the Indian government should focus on job creation instead of distributing freebies for political benefit. Despite his impressive academic credentials, I doubt whether Rajan has any idea about how to solve India’s unemployment problem.
There is massive unemployment in India, and the crucial question everyone needs to answer is: how to create jobs on a large scale. To answer that, we first have address how jobs are created on a large scale. Jobs are created on a large scale when the country’s economy expands rapidly, and that happens when there is rapid industrialization.
If India needs to take a leap into becoming a modern industrialized society, we need several people with technical knowhow. There is no dearth of that in India. We have a huge pool of technical talent. In fact, India’s IT engineers are largely manning California’s Silicon Valley, and American universities have several Indian professors of science, engineering, mathematics, etc. I have met many of them in my visits to the US.
We also have large quantities of natural resources. India is not a small country, it is practically a subcontinent. The main problem, however, is this: the goods manufactured must be sold, which means that the Indian masses should have the purchasing power to buy them. This requirement is missing. There is massive poverty in India, and prices of even essential commodities like food and medicines have witnessed a steep rise in recent years.
Incomes are relative to the price index, and when prices are going up that means that even with the same nominal income wages/salaries are going down. When people are finding it difficult to even buy food, how can they be expected to buy industrial products? I have written about this here and here.
The problem is not how to increase production (we have both the technical expertise and the resources to do that), but how to raise the purchasing power of our masses, in order to have a market for our goods.
In the imperialist era, markets were captured by force. For example, the British conquest of India or the French conquest of Algeria and Vietnam. But the era of direct imperialism is over. Acquiring foreign markets is difficult, since they are already saturated by domestic or Chinese goods. Moreover, reliance on foreign markets is precarious, since it may be cut off by another power e.g. China, or there may be a recession in that foreign country.
So the only recourse left for us is to convert our huge population into a huge market, which means raising purchasing power. How is that to be done? We may consider a historical example.
In the Soviet Union, where there was a revolution in 1917, the policy of rapid industrialization was initiated after adoption of the first five-year plan in 1928. The broad methodology was this: prices of commodities were fixed by the government, and these were regularly reduced every two years or so by 5-10% (and sometimes wages raised by 5-10%). This way, real wages went up and people could buy more goods.
Thus, by state action (and not laissez faire) the people’s purchasing power increased. Simultaneously, industrialization was rapidly stepped up, and the goods manufactured could be sold (as the people’s purchasing power had gone up).
At the time of the Great Depression following the Wall Street crash of 1929, and when one out of every three workers in the US was unemployed, the Soviet economy was rapidly growing and millions of new jobs created in Russia.
This is not to say that we must necessarily follow the method adopted in Soviet Russia. We can devise our own method of raising the purchasing power of the masses, but unless that is done we can never industrialize on a large scale, and can therefore never eliminate poverty, unemployment and other socioeconomic evils.
Let me make it clear, I am not against private enterprise. But I am certainly against crony capitalism practised in India which has resulted in just seven Indians owning more wealth than the bottom 50% of India’s 1.4 billion population.
Rapid industrialization of India is possible only under strong patriotic political leaders who are determined to rapidly industrialize the country. Under the present system of parliamentary democracy, that is not possible, as our political leaders are only interested in power and pelf by winning the next elections, and have no genuine love for the people or their welfare, and therefore no genuine interest in industrialization.
In fact, Indian parliamentary democracy runs largely on the basis of caste and communal vote banks. Casteism and communalism are feudal forces which must be destroyed if India is to progress, but parliamentary democracy further entrenches them.
China has no parliamentary democracy and has progressed rapidly, while we are still embroiled in Ram Mandir, Gyanvapi, caste census, and cow protection issues.
Therefore, parliamentary democracy in India has to be replaced by some other system led by modern minded, selfless, patriotic leaders who are determined to rapidly industrialize India, and make its people prosperous. To do that, the enlightened, patriotic sections of our people must use all their creativity.
