Monday, December 3, 2012

Generating Employment for Indians- A Layman's Suggestions !

I am not an economist nor an expert in finding solutions to the complex problems of a complex nation like my own !

But like many others like me, I do keep a watch on developed nations such as the United States of America or China or Japan, that have been making visible material progress. Their Gross Domestic Product (GDP), per capita income ,  human development indices (HDI), etc., amply correlated by visible physical features vindicate their superiority!

For example, my country India has been with a shamefully low per capita GDP of about $ 3700 . The actual purchasing power of the citizens of India are much lower than this figure. Regrettably, it appears that the Indian policy makers no longer feel the shame ! [See the GDP per capita income list of the world's nations here !]

Indians keep justifying the low per capita GDP on account of the huge population. But then they forget about China whose population as well as the per capita GDP are much higher ! This clearly shows that the Indian situation is on account of poor governance , administrative policies and gross mismanagement of public affairs! Perhaps all these happen due to the defective democratic governance system that the country has adopted ever since it had become a modern republic. 

Indians are too keen to watch the politics and policies of America rather than their own. I too am no exception. What makes me salute the American system is the importance that they give in generating employment to the citizens of the country. A US president is evaluated as good if he could implement policies which generate employment to the US nationals.

But unfortunately no Indian politician talks about employment generation. Neither is employment a factor for evaluating the Indian government!

There are thousand an one ways by which the Indian government can generate employment for millions of its unemployed so that they can at least have a decent living and surely elevate them much above the poverty line.

" Give me a fish, I eat for day; teach me to fish, I eat for a life time!"

This famous quote, supposed to be the favorite of Mahatma Gandhi is not unknown to those in the higher ruler ship of India. Regrettably they keep thinking of the ways in which such a teaching can be imparted to the millions only to conclude that such a thing is not practical in a country populated so heavily!

When thousands of Indians could make a decent living by the so called medical transcription work, I couldn't help saluting the US policy makers who could force their medical practitioners to shell out some of their incomes to others down the line who are only skilled for some lower level clerical jobs!

The westerners are advanced because they have realized the overall advantage of distributing the abnormal wealth at some hands to those who are not so privileged or fortunate. They too were having the mindset of the present day Indians before they faced the 'great economic depression after the world war-I'. But that had made them learn a lesson. And that lesson was about the importance of sharing the profits of business and industry to the larger populace for sustaining economic activities. 

The great depression forced economists to analyze the reasons for such a failure of economy when industrial production was at its peak! They found that all productions are useless unless there is a market that absorb the products and services. And such a sustainable market is possible only when business and industry willingly share their profits with their employees and the workers thereby enhancing the purchasing power of the people as a whole!

They learnt that the profits held up by large Corporate entities are not going to make the country or the economy progress. If they keep producing and accumulating profits for some time without enough sharing, there would not be any markets for their products and services and eventually their businesses would come to a grinding halt.

So, for longer sustainability of business, business tycoons and business leaders have to find ways to distribute their huge cash surplus held up by a few of them to a larger group of people, so that the latter could get some decent  income margins to be spent for more goods and services.  

Again at every such transaction, the government is going to earn from the taxes.

Indian corporates and government  are going to repeat the mistake that the westerners did early in the 20th century which triggered the Great Depression of the 1929.

Why I say this ?

Had they distributed even 10 % of this cash, which in any case they have amassed by paying less to their employees in comparison to the world standards, the Indian markets would boom. The Indian government would gain substantially in taxes, both income tax and other taxes.

The cash surplus of the Indian corporates are because of their reluctance to pay dividends to their share holders and their reluctance to pay better wages to their lower rung workers and employees.

The cash surplus with them cause them to show a higher book value for their shares. This in turn causes poor investors to shell out their hard earned cash to purchase shares of these companies at higher margins. The investors do not get any return from the company as such. The investors seem to make profits by selling their high margin shares to other gullible investors. The corporates have nothing to lose !

Why such a situation which actually do not help the majority of the Indian public to enhance their incomes so that they have some better  incomes for acquiring better goods and services ?

Whatever the low income, the government tax them heavily. What is the logic in taxing an individual who makes Rs 150,000/- ( ~ $ 3000) per month and the corporate which makes Rs 150 million at the same rate ?

The individual is left with Rs. 100,000 /- where as the corporate is left with Rs.100 million. Since both are individual entities, the money deprivation shock to the individual is much more. The excess money accumulated by the corporate does not do any good for the country ordinarily. Because it it blocked so long as they find some means of spending it. The individual on the other hand has many unfulfilled needs. He could have released that 50,000 immediately to the market had it not been cut by the government as tax. The government would have got an equivalent amount or much more had this money were used by the individual for meeting his unfulfilled needs.

This kind of illogical mind sets in the policy planning levels actually make India a poor nation. They do such things which causes the money generation points dry before they mature.

Killing the goose ?

India can become the richest nation in the world, had the negative growth policies made out by egoistic know-all mindset of those concerned decide to ease out a bit by relaxing their muscles and minds.

Instead of distributing money for various labour generating schemes  here and there, if the government allows all higher income group salaried people who pay more than say Rs.300,000 per year as income tax to have a regular personal assistant for jobs like driver, gardener, security, etc and the payments made to such people to the extent of say Rs.200,000 as fully exempted from tax, can you imagine the number of regular employment generated in India overnight ?

Of course, some people might always do some manipulations. That should not be the reason for not trying out some innovative methods.

That kind of an initiative can make the government popular overnight . Not only they become popular, the economy would boom. It is a kind of action that can force the higher income of the upper strata of society to percolate downwards immediately.

In reality the government's income is not going to get reduced. It will also boom !

There could be many such moves. But for that the government should be ready to take suggestions from all, even from laymen like me. If the suggestions are good for the country they should be broadminded to implement it.

How long they keep themselves isolated in self made chambers of petty politics ?

The country needs people of a different mindset  for thinking and implementing such radical thoughts !

Let us hope we get such thinking people by 2020 !

View the linked list of all Blogs of the Author Here ! ]


  1. Dear Mr.Rajan, The ideas put forth are simple down to earth. As I have been exhorting in many of my blogs, the unfortunate part is that in spite of India wowed to embrace democracy, the system functions are nothing different from style of functioning of Kingdoms of the past.
    The elected representatives once they become political masters remain totally isolated from the people making the government as whole work as if they are in a palace inside a fort insulated from the realities of the common man outside.

    The people's representative system have failed in its purpose as a means for government-people interactive mechanism as once elected Politics attains a different meaning and the game of politics in practice is far from what it is supposed to be in principle.

    The scenario in most of the government is not conducive to function harmoniously as the elected representatives fall into formations of self-serving interest groups, with disruptive tendencies.

    In spite of advancement in quick communication methods, no government department or agency has an effective IT based mechanism for people's interaction to be heard.

    The net effect is that there are delays in decision making, decisions made are unsuitable or unworkable as most of the decisions taken are based on political considerations and ideals that are far from ground realities.

    1. Our problem seems to arise from a small loop hole in the constitution which allows the development of professional politicians without ensuring any essential educational qualifications.

      The highly qualified bureaucracy should have been the guiding force behind the political bosses. However, that too has deteriorated because of the ambitions of the seasoned politicians to grab the powers of the officials at all levels and making the latter to play only to their tunes.

      Power is required to be maintained, because they feel that is essential for them to continue in power.

      Thus both the political and bureucratic bosses are busy with issues mainly concerned with those things which they feel essential to hold on to power perpetually.

      The coalition democracy of the present times has given more opportunities to all.

      People are confused. They do not know what to do !

      Remember what happened in Germany. A popular leader with marginally higher support cleverly subverted the system to become the most feared autocrat.

      Let us only hope that such situations do not arise in this country.

      Let us also hope that our democratic systems correct the follies by itself in the due course !


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