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India Shining? Technological progress and the poor November 17, 2009

Posted by ippg in Uncategorized.

I recently visited my hometown, Delhi after a hiatus of two years and was awed by the increase in financially well off middle class. The growth in the number of people traveling in Toyotas and Hondas, owning large furnished apartments, working in large multinational companies was phenomenal. On the other end of the spectrum I still saw the country depicted in the movie “Slumdog Millionairre”, where thousands of people do not get a couple of meals a day. This has shown that though India has shown growth over the years, inequality between rich and poor has risen as well.

Technological advances have played an important role in development of a country. India has successfully used its skilled workforce in providing services in Information Technology, Biotechnology and Pharmaceutical sciences. This has created a large number of jobs leading to the growth of the Indian middle class. Most of these sectors are based on providing services thereby the country is emerging as a service economy.

India would need investments in specific sectors to create jobs for the uneducated, low-income communities. Stronger government measures are needed to make people at the bottom of the pyramid self-sustainable. Finding its niche in agriculture and other product driven sectors would be important. The point I want to make is that economic development of communities at the bottom of the pyramid is equally important if not more as compared to investments in social programs. Employing people by generating jobs in manufacturing will be a key element to growth and reduce inequality.

Care should also be taken to design correct measures so that resources are not clustered in a particular city or town. Some examples are restricting the maximum number of industries in a particular city to allow moving businesses and manufacturing units to other towns and villages. Providing tax credits to foster new manufacturing units would be other policy instruments needed to build a product-based economy.

Establishing proper infrastructure would be an essential step in moving in this direction and is currently high on the government’s agenda. I believe that policy decisions to invest in both product and services sector would be important for economic development of the country.

Tania Dutta

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