India began with a mixed economy consisting of a state-owned public sector, and a private sector subject to industrial licensing and many administrative controls on imports; exports; foreign exchange etc. Between 1950 and 1990, the economy grew at only 3.5% per annum. In 1991, India also was forced to reform her economy. The reform has had three main strands--LGP--Liberalisation; Globalisation; and Privatisation. The first reform has helped the rapid expansion of the existing and new private enterprises. The second has led to a sustained growth of exports, both in services like IT, and in manufactures like drugs and engineering goods. The third reform of privatisation has faced more social and political resistance. However, it has benefitted the consumer and job seeker in telecom; banking; airlines; electricity etc. The resistance has been more to the selling of the government stake in state owned enterprises, SoE.
All the above reforms have taken the Indian economy to a high growth path of 8%. In the peak year of 2007-08, it exceeded 9%. But questions have arisen on the quality and contents of the growth in India. Inflation rose above 12%. It hurts the poor more. Disparities of income and wealth have widened. The better performing companies have raised their market share and profits. Under liberalisation, corporate survival is not guaranteed, resulting in some closures and job losses. In the competition for talent, companies have raised the total managerial compensation, consisting of salaries, allowances, bonuses, benefits, stock options etc. The outcome of the 2004 parliamentary elections was partly influenced by the argument that the benefits of high growth had not reached the common man. Even within the ruling UPA Coalition, the debate favoured growth not for its own sake. Industry Chambers and Professional Associations have been holding Conferences on Inclusive Growth; its challenges; and action needs.
Global Concern
This concern for Inclusive Growth has now become global. It has been a major issue in the 2008 US presidential campaign. Against a mood of despair and hopelessness, Obama has won by offering hope of change for the better. The US economy is reeling under recession, hit by three main problems--the home mortgage defaults; bank losses; and considerable credit card dues. Some fear even a Depression 2, revisiting the horrors of Depression 1 of the 1930s.
In the early stages of the 2008 US financial crisis, there was a perception in the EU that it was more of an American problem. But, it is now clear that Europe is also in recession. …