It is difficult being prime minister of the world’s most populous democracy, when the world talks globalisation. Manmohan Singh’s call on Tuesday to find ways to accelerate industrialisation, and a labour-intensive one at that, is an impassioned call to address the employment needs of those stuck at the bottom of the growth pyramid, even as India Inc dreams up big plans for overseas acquisitions. Indeed, globalisation and liberalisation have unleashed the hidden potential of India’s entrepreneurial spirit and workers who thrive on high skills and English language capabilities. But leaders seeking political fortunes at the bottom of the demographic pyramid still have to contend with the twin monsters of unemployment and inflation. The harsh fact is that capital flows into India from overseas are in high technology or in manufacturing of a fairly capital-intensive variety. And the government’s own coffers are limited. The exchequer needs to spend on infrastructure projects, pay an army of government workers and for subsidies on everything from petroleum products to fertilisers. Just what can it do in such circumstances?
The answer could lie in legitimate legislative methods and fiscal measures. Special economic zones can provide a measure of solace. A construction boom funded by capital flows, not speculative binges, can boost jobs as this sector is labour-intensive. The government should continue to free State resources by getting out of public enterprises that do not make sense. Easier labour laws can facilitate hiring. And public investment in agriculture would be the best way to pull rural citizens up by their bootstraps.
While the government can exercise all such options, it would be wise not to regress into socialist rhetoric that runs down private enterprise and its beneficiaries. Surrounded as he is by Leftists and under-informed regional leaders, the PM must walk the tightrope carefully. The fact remains that harnessing natural energies goes a longer way than artificial props in the quest to boost employment.