●The open, competitive, liberal economy created national champions. The champions were small to begin with but acquired the strength to be competitive nationally and, in some cases, internationally.
➢The names that spring to mind immediately are Infosys, TCS, Reliance, HDFC, ICICI, L&T, Tata, Serum Institute, Biocon, Maruti, Bajaj, Hero, TVS and many others.
➢These national champions created wealth. They also gave birth to a large middle class made of employees and shareholders. Thanks to the large businesses, medium and small businesses flourished.
The culture of risk taking was born. Indian industry shed export pessimism. Aditya Birla took an Indian manufacturing company abroad and pioneered a new trend of overseas investment.
●India’s GDP, in constant prices, was Rs 25.4 lakh crore in 1991-92. It doubled to Rs 50.8 lakh crore in 2003-04.
●It doubled again to over 100 lakh crore in calendar 2014. That is a lot of wealth.
●Per capita income, in current prices, that was Rs 6,835 in 1991-92, increased to Rs 1,71,498 in 2021-22.
We Failed the Poor
●There was talk of India becoming a middle income country although, in my view, that is some distance away.
There is the boast that India is the fifth (no, a minister said, the fourth) ‘largest’ economy in the world, but remember India is not yet a middle income country, not to speak of being a rich country.
●There is talk of India becoming a USD 5 trillion economy but, in my view, that is a meaningless goal post.
●Even if the Indian economy crawled, it will reach that milestone some day. (A bicycle will also take the rider from Delhi to Agra, as will a Rolls Royce.) These are, in economic terms, irrelevant.
●What are relevant and meaningful are the distribution of income and wealth, the sustainability of the growth model, and the impact on the environment.
●By those measures, the Indian growth story has failed the bottom 50% of the population.
The bottom 50% gets only 13% of the national income and holds just 3% of the nation’s wealth (OXFAM). There is, in practical terms, no wealth tax. There is no inheritance tax.
●Agricultural income is outside the tax net. Gifts to relatives are not taxable.
●Consequently, wealthy individuals find it easy to redistribute their wealth and income among close family members.
●The bottom 50% is poor because it has few assets, little income and no opportunity for advancement.
●There are millions of poor people but we pretend not to notice them.
➢The spanking new bridge catches the eye, but the eye ignores the poor families who huddle under the bridge.
➢There are children selling pencils or towels or pirated copies of books on the streets; they are poor.
➢There are 30 crore daily wage labourers; they are poor.
Every farmer who has no more land than the average holding of agricultural land (1 hectare) is poor.
●There is malnutrition and hunger among sections of the people who do not get adequate food; those people are poor.
●The poor and the lower middle class make up the bottom 50% of the population.
New Core Constituency
●The increase in the wealth of the country, under the prevailing policies, goes largely to the top 50%. No political party has reset its policies to benefit the bottom 50%.
P. Chidambaram’s pitch at the Raipur session of the All India Congress Committee was to reiterate the party’s commitment to an open, competitive and liberal economy (in order to create wealth) and for the Congress party to embrace the bottom 50% of the population as its core constituency. It will be a decisive shift from relying on voting groups based on caste or religion.