India needs to formulate policies that will encourage new companies that challenge incumbent players, creating competitive advantages to multiply jobs and incomes, leading British economist John Kay said here on Friday.
Specifically in the context of modernising retail trade in India, Kay said the fear of loss of livelihood for small traders and street vendors are real, but modernisation is critical to generate employment and enhance income levels.
"It ( modern organised retail) will destroy jobs in the short term because it will bring in efficiencies," Kay said on the sidelines of the Hindustan Times Leadership Summit here.
"That is precisely the reason why India needs to usher in modern retail trade, because promoting employment through (the current) inefficient system is not sustainable in the long run," said Kay, a visiting professor at the London School of Economics.
"Growth of successful business is driven by the people who are passionate about business and not by people who are passionate about money and are greedy," he said.
"If you want to go in one direction, the best route may involve going in another. This is the concept of 'obliquity': paradoxical as it sounds, many goals are more likely to be achieved when pursued indirectly," he said.
Kay said manufacturing fetishism - the idea that manufacturing is the central economic activity and everything else is somehow subordinate -is deeply ingrained in human thinking. "The perception that only tangible objects represent real wealth and only physical labour real work was probably formed in the days when economic activity was a constant search for food, fuel and shelter," he said quoting one of his recent articles published in Financial Times.
"Complex goals are rarely best achieved when pursued directly: the happiest people are not those who pursue happiness, the wealthiest people are not the most materialistic, the most profitable companies are not the most profit-oriented," he said.