India and its growth model.

PANDIT NEHRU on 14 august 1947 reminded the country,that the task ahead included'' the ending of poverty and equality of opportunity''.these were the basic foundations on which India embark upon its path of development,India a socialistic pattern of society adopted USSR five year plan for economic growth and initially took full control in decision making later converted to mixed economy.

India claims to achieve substantial victory in reducing poverty,yet 96.9% of population is living below $5 dollar a day with world third largest poor country.And if we talk about equality of opportunity it means ''No one should be prevented by arbitrary obstacle from using his capacities to peruse his own objective''.this definition is contradictory in Indian context because Stalin model transfers power from public to bureaucrats and policy makers,they decide fate of their citizen,Equality of opportunity best defines under free market economy. 

India adopted socialistic pattern of society with high expectations,intellectuals in India took for granted that central economic planning is the wave of the future that will set their country on the road to rapid economic progress,India adopted Stalin's model of growth after independence while Japanese and Asian tigers believed  in voluntary cooperation.

The contrast between India and japan during first thirty year after it achieved independence in 1947 and japan not today but during thirty year after Meiji restoration in 1867,both were the countries with ancient civilization each had its structured problem,both countries experienced major political change.

In India Nehru came in power and adopted centrally planned economy,while reason for adopting centrally planned economy was against the background of colonial rule.despite the similar circumstance in japan in 1867 and India in 1947 the outcome was different,japan dismantled its feudal structure and extended social and economic opportunity to all its citizen a lot of ordinary man improved rapidly on the other hand India with centrally planned system with almost full control on decision making on all sector failed to provide economic freedom and couldn't come out of poverty ,when world was experiencing'' golden rate of growth'',India was suffering from Hindu rate of growth ,BOP crisis and because of failure of its policies India experienced substantial backwardness and several crisis.

Japanese govt played major role in development,it sent many Japanese abroad for technical training,imported foreign experts,but at no time did try control voluntary cooperation and direction of investment,the state maintained larger role in defense sector.On the other hand India took full control on agriculture and industry,pvt enterprise were restricted through licencing.

Since first five year plan govt emphasized the role of agriculture and heavy industry,and underestimated the role of capital formation.By creating human capital and physical capital simultaneously India could have achieved success in expanding heavy industry sector and generating investment but first major emphasis on education or skill formation was given in sixth five year plan

Major investment was done by govt but could not get fruitful result,People had no option but to engage themselves in primary sector with low earning,because of overall low earning savings were low,because of low saving rate and unorganized banking system, supply of loanable fund were low and hence investment and aggregate demand were low.economy was working below its capacity of production.
The inability of public servant to perform their given task was major drawback.Theory of democratic displacement suggests''a bureaucratic system,increase in expenditure will be matched by fall in production''.His theory applied in full force to the effect of increase in bureaucratization and centralization,corruption started prevailing from food distribution system to inefficient allocation of public resources,From education system to hiring of unskilled workers
.Due to large control  of public sector in Indian economy,Bureaucracy  and politics became the center of attraction for Indian powerful and elite people,as politics became most profitable industry,eventually corruption crept into the system and unskilled worked began operating Indian public sector leading to decline in economic growth and output. 

Bali package,step towards Free Trade.

On Dec 7-2013,representative from the WTO 159 members reached an agreement on first multilateral deal in WTO history.Although the trade facilitation agreement dubbed the ''Bali Package'' did not address the north south issue.
The Bali Package commits WTO members to move towards non-tariff trade barriers.the trade agreement has been criticized for failing to meet the goals set in 2001,Doha development agenda.
Doha round of trade negotiations could not succeed because most of developing countries including India,did not agree to remove agricultural subsidy they provide.though developing and developed country gained from trade resulting from removal of tariff and non-tariff barrier.and WTO has been making constant effort towards integration .and Bali package is one of the result of those effort.
Here are some 3 important point upon which Bali package was based

The first pillar is Agriculture. This is the cornerstone of the Doha Development Agenda which the WTO has been working on since 2001. Agricultural issues are very dear to developing countries, and the Bali Package delivered some important outcomes.

For example, it sets us on track for a reform of export subsidies and measures of similar effect, and it makes practical progress towards better implementation of the tariff quota commitments assumed in the Uruguay Round. There is also a reaffirmation and a deepening of the political commitments assumed in Hong Kong on trade liberalization and the reduction of distorting support to cotton — a very important issue for the African countries that grow that crop.

The Package also provides temporary protection for food security programs in developing countries, which allow for the stockpiling of grain for subsequent distribution to the poor. As we know, some of those countries could be exposed to legal challenges in the WTO for exceeding the limits stipulated in the Agriculture Agreement for certain types of domestic support. So, in addition to the temporary protection against legal challenges, the Bali Agreement states that a permanent solution will be negotiated and concluded before the 11th Ministerial Conference in four years' time.

The second pillar of the Package is Development.

Here, a monitoring mechanism will provide for the review and strengthening of special and differential treatment provisions for developing countries, which are contained in all WTO multilateral texts. This achievement is vital for the equilibrium and efficacy of the multilateral system.

There are also a number of specific measures to support the Least-Developed Countries.

They include reforms that would enable services providers in LDCs to enjoy new export opportunities in developed country markets.

They also include steps to simplify rules of origin, which again will open up new export opportunities for those countries specifically.

Under this pillar we will also see improvements in trade preference arrangements which extend exemption from tariffs and quotas to LDC exports.

The third and final pillar is Trade Facilitation, which sets out to simplify and modernize customs procedures, and make them more transparent, thereby reducing transaction costs. The Agreement on Trade Facilitation will be able to provide a significant — and today much‑needed — boost to the global economy, delivering growth and jobs. This could be worth up to $1 trillion per year to the global economy — generating up to 21 million jobs.

Significantly the Agreement also ensures the provision of technical assistance to support developing economies and the least-developed economies to implement these modernizing reforms, and therefore help them integrate better into global trade flows.

Clearly estimates can vary, but, once the Agreement is implemented, there could be an expansion in developing country exports of up to 10% — compared to a 4.5% expansion in developed countries.

It is true that the deal represents only part of the Doha Development Agenda. But there can be no doubt that this is a significant package that will provide a considerable economic boost and improve the lives of millions of people around the world — particularly among the poorest and in countries whose economies have stalled and are suffering high levels of unemployment.

In the specific case of the European Union and its member States, the conclusion of the Bali Package reflects that grouping's chief negotiating objectives. With the Agreement on Trade Facilitation, opportunities for expanding trade will clearly increase. The Agreement also offers potential to facilitate the internationalization of small and medium‑sized enterprises, which are important drivers of job creation and income distribution in many European countries.

Curious case of Devyani.

 On Dec 11 2013,the deputy general Consulate general of India with consular immunity(consular officials do not enjoy the same degree of immunity as higher ranking diplomats) arrested in New York was charged by authority in committing visa fraud and providing false statement in order to gain entry to US for the women of Indian nationality for domestic worker, her arrest have received much attention in Indian media.
Devyani was charged that she committed visa fraud ,under US state code section 1746,the complaint alleged that Devyani and Sangeta Richard verbally agreed in India to a starting salary of rupees 25000 pm. equivalent to $573 pm about 3.3$ an hour,Devyani signed a written contract with Sangeta which stipulated her hourly salary in US would be 9.75$ per hour,this contract was submitted to the US govt as a part of visa application.
The complain claims that Devyani instructed Sangeeta not to say anything to the embassy interviewer about being paid only about 3.3$ an hour but to say she would be paid 9.75$ an hour. clearly shows she had intention of underpaying her.
Media ,govt stood against US ,because this is not a crime in India,though minimum wage act 1948 is there in India,and is openly violated,but who cares because she was devyani an IRS officer,she had power to influence,her father was also an IAS officer,they have strong influence,she is also involved in Adarsh scam.
one case of violation of minimum wage that came in limelight, millions of  Sangeeta are there in India,who are underpaid workers,but who cares,millions of child labor are underpaid in India,If India were fair she would have given justice to millions of sangeta who are underpaid.every Indian who works outside India,must feel that Indian govt treat every citizen equally.
From the blog of IAN BURUMA''Devyani's case is more interesting,She was born into the dalit caste''the untouchables''.who in former time would not have gotten any where near the elite,except to sweep their floors,since Indian independence govt have dont much to improve the dalit's status,and the deputy consull general is one of the beneficiaries of this policy.she is the member of new Indian dalit elite,increasingly wealthy and proud to represent the rising power of the world''
   If the allegation that Devyani systemically underpaid her worker are true,this shows how fully she has adopted the custom of the class to which she has risen.As with their politicians,a countary people it seems ,often have the diplomats they deserve.'' this is the image we have built.
Times of India wrote''the sad truth is that India is viewed abroad as third grade banana republic" indeed its sad truth but how do we view our illiterate  poor public in our country?how do we view those Indian riot victim,who are demanding justice?how do we view those who are beggars at street?how do we view those ''aadivasi'', aren't they indian?we only hear those voices which is loud,but truth is that despite its significant achievement india has still millions of poors,whose voice are unheared..
every Indian citizen ,irrespective of caste,region,religion should be treated as first class citizen ,then we can expect others to treat us as first class.

Is capitalism-A Self Destructive Weapon.

Wonderful book written by Milton Friedman ''Free to Choose'' in which he advocated complete capitalism without government role ,except in education and infrastructure.
He advocated that success of american economy ''economic miracle'' was based on two sets of ideas,one set of idea was embodied in the ''Wealth of Nations'', it analysed the way in which market system could combine the freedom of individual to peruse their own objective with the extensive cooperation and collaboration needed in the economic field to produce our food,our clothing,our housing,Adam Smith's key insight was that both parties to an exchange can benefit and that,so long as cooperation is strictly voluntary,no exchange can take place unless both parties do benefit,Adam Smith put it ,an individual who intends only his own gain,led by an invisible hand to promote other which was no part of his intention and it benefits whole society.
 The Wealth of Nations''gave an idea to expand business,advocated how individual freedom is important in economic activity,and government intervention only distort economy,price system created by market,based on those ideas,  industrialization began to expand ,world grew rapidly,due to comparative advantage world economy integrated,innovation played major role.and during that time government role was limited to education,roads and defense service.so it is clear that capitalist society played all roles in development process
so with the increase in global warming,various environment distorting threat,this question is obvious,when individual provides incentive to society with no intention to promoting it. then individual can also harm society to promote his self interest?
what are the results of cost benefit analysis when we compare our environment of today with that of  before 1776? we can see tremendous change in environment due to rapid industrialization, .benefits for industrialization is more or cost we have to pay due to environmental damage is more?  public property is being destroyed by individual to promote self interest,which has far more serious consequence then benefits gained from capitalism,capitalist treated public good as free good and utilized it badly,so on one hand we gained from capitalization with the creation of jobs,innovation, on the other hand we are suffering from global warming.deadly diseases,In order to promote self interest. Individual or society undermined the role of nature,disutilised public good,and shortened the life span of earth and probably human existence. Development was indeed essential but not with the cost of environment,exhaustible natural resources utilized compared to their regenerative capacity,how climate change is growing concern.
So, by choosing the capitalist world and by choosing to go against nature we have challenged the nature,free market economy where individuals were given full freedom to peruse his goal indeed benefited the society by developing technologies,made world better place to live,and all glaring achievements.But trade-off between economy and environment is justifiable?
Today the world has became the survival of fittest''if you are good at something you will survive otherwise you will be vanished,luxury,negative externality generated by capitalist is being paid by every individual but benefits are only for few
Now here comes the role of government,economy is better off without government intervention or government intervention is necessary for an economy to grow.
 Now lets take two extreme example one is complete freemarket,second,is centrally planned economy.
As we have seen in case of complete free market economy,individual distorts public goods without caring about future,makes market survival of fittest case,(if you are most productive you will survive otherwise you will thrown out of market),leads to excessive concentration of wealth in upper class and makes lower class worse off.but economy grows rapidly as we have seen in case of  USA,JAPAN and many more developed country.Second one is centrally planned where government controls economy completely,but centrally planned economy totally distorts economic activity because it restricts individuals to innovate,expand grow,In centrally planned economy bureaucrats and politicians decide fate of their citizens.
In case of India from 1st five year plan to 12th five year plan,despite its various efforts economy couldn't grow,Failure in agriculture front,failure to bring India self sufficient in mining, heavy industry,despite its various efforts India is still third world largest poor country with 96% of its population living in less than $5 a day. (according to world bank),this is sufficient to show failure of centrally planned economy.In democratic society if government regulates economic activity ..politics becomes the most profitable business,we can call it Democracy becomes ''FOR THE CAPITALIST,BY THE CAPITALIST,FROM THE CAPITALIST"
  Governments role should be in between capitalist and leftist,should emphasize on environmental loss during growth,Education maintaining roads,canals etc,maintaining  law and order,create equal opportunity for all,creating ground upon which economy grows,taking care of property rights,encourage innovation,taking care of international issues,protecting public rights,rather then entering into business and make politics itself most profitable business.

MAZEN QUDDUSI

Consequences of Inequality

When we talk about inequality,the first form of inequality that comes into our mind is income inequality,

Income inequality refers to unequal distribution of wealth.general notion is that 90% of wealth is owned by 5% of population and remaining 10% wealth is owned by 95% of population..                                   Increase in per capita income of a country is an indicator of development,but development of only those 5% of people, and what about remaining 95% of people whose contribution is very small,

With the increase in globalization in India problem of inequality has also increased since last 30 years, JAYANTI GHOSH an economist pointed out"since 1980-90 per capita consumption of rich population has increased and the bottom population's per capita consumption has declined,. and this is perhaps most dangerous side effect of capitalist society,or free-market economy,. middle class real wage has been declining and upper class profit has been increasing.

actually greater income inequality is somewhat acceptable because it gives incentive to work hard,it promotes innovation but income inequality has some dangerous consequence which i would like to discuss in brief.

first it directly effects democracy by reducing trust in political system ,our democracy ceases to function because some people have so much money they command greater power in policy making to support their preference.

The most commonly voice concerning about income inequality is that it has polluted our politics.

In democratic society like INDIA every person is supposed to be treated in a same way, but  people in largest democratic country are being treated according to their social status (which is measured on the basis of wealth.).

Second most imp factor is that inequality give rise to social hierarchy, gap between rich and poor.,

quality of education,quality of health care,value of life are only for those who generally come under the category of top 5%. . 

remaining 95% struggle for their daily needs,struggle for basic health,struggle for quality of education, for their children, and thanks to growing capitalism with the increase in rent seeking,greater monopoly few giant company accumulates all the wealth.

if India is to perform in long run it must redistribute its wealth to poor,and must not compromise with education and health sector..debate to implement inheritance tax must go on..

and on moral ground at least try giving respect to poor ,you owe to them in many aspect ''they are the one who serves you best dishes,they are the one who take care of your child your home ,. but unfortunately respect which is costless is also not there,and for all these social hierarchy is to be blamed.  

government should also be blamed for Inequality weather in terms of social or income .

instead of giving them food security,unemployment benefits ,govt should focus on creating opportunity for them,providing employment to them ,provide them better health care and quality of education. 

lastly on behalf of poor i would like to say'' i want this to change,i want to move back towards a society where the hardwork of unskilled workers is considered worthwhile in social interaction regardless of how many rupees it brings to home.i want to return back to society where being a good parents or friendly neighbor earns as much as respect as making millions of rupees, 

  MAZEN QUDDUSI