KOCHI:
We need a design of development which will create enough new productive jobs to absorb all the new entrants to the labour market and fresh thinking is needed about the role of public and private sectors in the promotion of new technologies, said former Prime Minister Manmohan Singh.
He was inaugurating the National Seminar on “Macroeconomics Developments in India : Policy Perspectives” at St. Teresa’s College. We live in a world where developments in science and technology have become a major determinant of power and wealth of a nation.
There is more need than ever before to promote technologies which will induce an environmentally sustainable pattern of development, which will help to control degradation of our land, water, air and other natural resources. We need a new macroeconomic thought involving a judicious blend of fiscal, monetary and exchange rate policies, to emerge to meet these challenges.
This is where universities such as these, students such as all of you and scholars like you can provide new ideas and solutions. The nation needs you all much more today than before to provide new path breaking macroeconomic ideas for policy making. I sincerely hope such bright young minds will rise up to the challenge and help our nation tide over these enormous challenges that we face.
University is a place to meet people of various beliefs and ideas and not be confined in an echo chamber. I recall listening to economists such as Joan Robinson with her provocative lectures on Keynesian economics, Nicholas Kaldor on his three factor growth model or Richard Kahn on the multiplier effect during my student days at Cambridge, he said.
Immediately after independence, India adopted a path of economic policy that had the state firmly in control. This was the prevailing view then and India’s most immediate task at hand was one of nation building.
The first Planning Commission document in 1951 outlined the importance of capital investment in an economy, particularly in economic and social infrastructure,and emphasizedt he need to increase national output as means for prosperity. This could be achieved predominantly through investment by the state as private enterprise was still under developed.
Thus the first few decades of India’s economic development were led by the state until private enterprise developed and could take over. This is also the reason why India’s economic growth rates since Independence have been among the least volatile of all major developing economies.
In India, we recognized the need to limit the role of the state in economic development but also regarded the role of the state as unequivocally important in certain sectors such as infrastructure, social sectors of healthcare, education, environment etc. We de-licensed many industries and allowed the private sector,both domestic and foreign, to contribute to the economic development of the nation.
This has borne fruit as is evident in much of the progress our nation has made in areas of technology, communications, consumer goods and services. Our per-capita income grew rapidly and India soon joined the various global economic forums such as the G20 and an invitee to G7, the group of seven largest economies in the world.
Overall, our country has made remarkable progress since independence even though the pace of development has fallen short of the aspiration of our people. The first three decades of India’s economic policy focused on nation building through a strong state, developing capabilities in private enterprise and providing strong social foundations for economic development.
The next three decades of economic policy have been driven by increased private sector participation and a smaller role for government. Today we stand at the threshold of another beginning.
Ever since the 2008 global economic crisis, the wisdom of markets as a panacea for all economic issues is under severe doubt. Markets can fail. They fail often. When they fail, they fail big. Markets tend to propagate a “winner takes all” system that can be detrimental to social cohesion, especially in a diverse nation such as ours. Our nature of economic development is not leading to the creation of enough jobs to absorb all the new entrants to the labour force estimated at 10 – 12 million per annum. Inequality and joblessness can be extremely dangerous in a diverse nation such as ours. There are no easy economic solutions for these problems as the world grapples with the dilemma of balancing the benefits and damages caused by globalization, market failures and domestic imperatives, he said.
