N Vittal

The growth puzzle

Inclusive growth will remain a chimera, if the political and business dilemmas towards achieving it persist

N Vittal

Posted On Monday, April 19, 2010 at 04:48:17 AM

ROLE MODEL: The Japanese industrial practices could be emulated by the Indian industry for ensuring equitable growth which the government aims to realise

It is one of the delicious ironies of Indian politics that the Congress got two of its catchy vote-winning slogans, thanks to the opposition. In the 70s, Indira Gandhi’s Congress came up with the smash-hit Garibi Hatao slogan in response to the opposition’s single-point agenda of Indira Hatao.

History was repeated in 2004 when the NDA’s refreshing campaign of ‘India Shining’ made the Congress rediscover its love for the aam aadmi (Hindi for common man, used to refer to the Indian commoner) and the fashionable politically correct slogan of ‘inclusive growth’.

Perhaps, inclusive growth is an idea whose time has come. In India, it is the politicians who discovered the need for inclusive growth. If nothing else, the recurring terrorist attacks highlighted the fact that at least one religious group does not feel included in the mainstream.

Similarly, the repeated violence of Maoists in tribal areas of the country are a reminder that another section of the population too feels that it has not been included in the process of economic development of the country.

It is really a serious matter that after six decades of Independence, the benefits of economic development have not reached a significant percentage of the population.

Economic growth occurs when there is productive employment. Jobs empower people by conferring purchasing power on them. Hence the vital need for economic growth along with creation of jobs.

Politics and government are concerned with a quest for power. In a democracy, capturing power is through elections, hence the supreme importance to nurturing of vote banks. Inclusive growth is one sure formula for winning the loyalty of vote banks.

The emphasis on inclusive growth has meant focus on the minorities, the Scheduled Castes (SCs), the Scheduled Tribes (STs) and the Other Backward Classes (OBCs).

Creating wealth and jobs is the function of business. The pressure from the government, at last, has made the Indian corporate sector look into the issue of inclusive growth.

Indian industrial chambers too have stressed upon growth for all. While it is easy to pay lip service to the concept of inclusive growth, it is necessary to recognise the basic dilemmas in the political and business approaches towards achieving it. Unless these are resolved, it is difficult to achieve equitable growth.

In politics the basic dilemma is this. For the sake of nurturing vote banks, political parties all the time emphasise on separate identities like minorities, SCs, STs or OBCs. If the focus is so much on identities how can an inclusive mindset be developed which would include the mainstream of society?

Psychological inclusion may be evaded even if economic inclusion takes place. No wonder we are noticing a gradual decline in the overall sense of patriotism. How many of us feel that we are Indians first?

The dilemma of business is totally different. The focus of business is on profit-making and wealth creation. Many groups excluded so far from the mainstream lack the skills and mindset needed for business.

In this context, the best method for corporate India is to emulate what the Japanese industry had done after World War II. After the defeat of Japan, the Allied Powers under General McArthur introduced in Japan the labour laws of the United States of America.

The Japanese industry had the vision to convert the conditions imposed by the new legal environment into an opportunity and came up with the concept of lifetime employment. Using this principle to nurture its labour force, Japan could beat other countries in the next three or four decades.

Similarly, the Indian industry will have to meet the skill gap and come up with innovative concepts so that inclusive growth does not lead to loss of productivity or profitability.

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N Vittal

The growth puzzle

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