We have not only failed to create adequate purchasing power in the rural sector, but also through our actions, we have reduced gainful employment in urban areas, says Dr. A Besant C Raj, Chairman, IU and Besant Raj International Ltd.
There is considerable concern at all levels that the Indian economy after having been buoyant is losing steam and is now contracting. The Prime Minister recently convened a meeting of his economic advisors. The broad consensus was that the economy needs pump priming, but without adding to the current fiscal deficit. Before this meeting, the Finance Minister had indicated that as much as Rs.75,000 crore will be invested in infrastructure projects for this purpose.
Our economy, starting from the first Five Year Plan, has not suffered due to lack of investments but lack of purchasing power. While we have a food stock of more than 60 million tonnes in the godowns of the Food Corporating of India, several people in various parts of the country, particularly in Orissa, are reported to be dying of hunger. Our food production has been stagnating at around 200 million tonnes per annum since 1995. With a population of one billion people, the country is unable to consume this production. On the other hand, China, which has a population of 1.2 billion, produces and consumes 500 million tonnes of food grains per annum. It is reported that substantial part of the food grains is fed to animals, which later the Chinese consume, as protein rich food. China has achieved this by making every rural household a "Production Centre" either for agricultural or industrial production. China has encouraged rural households to be actively involved in tiny and rural industries, such as toy-making, electronic products, clothing, component making for major industries etc. This has resulted in creating significant purchasing power in the rural economy. This has also helped China to reduce labor input costs in production, as these households work continuously and maximize production to earn bonuses. This cost advantage has enabled China to replace Japan in several world markets. While we perceive our large population as a drag on the economy, China has converted this weakness into a great strength to conquer foreign markets.
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