The Dark Side of The Incredible Indian Economic Boom

this is the story of modern-day india as told by the media headlines india's rise to become the world's fastest growing economy india which has seen record economic growth despite the coronavirus pandemic india is very likely to grow in double digits this year people are looking for the next big driver of growth and india seems to fit the bill india is the fastest growing economy in the world right now and has been one of the fastest in the past decade and international media love to talk about its startups unicorn companies 8 gdp growth and how india is on track to become the next economic superpower but despite all these positive news something seems to be off as the economy is booming indians are increasingly unhappy with their quality of life and their personal economic situation and the numbers of those who struggle to just get by are going up every year according to surveys majority of indians have seen their lives get worse not better in the past years and they feel that things will only continue to get worse in the future while india's economy is doing better than ever life is getting harder and harder for most people but how is that possible how come that a country with a booming economy has a growing unemployment and millions of young educated people can't seem to get a job why are the benefits of the economic growth not trickling down to the regular people what exactly is wrong with india's economic boom and where will it all lead to this is the dark side of the indian miracle but to understand what's going on we need to go back a little bit in 1947 india ceased to be a british colony and gained independence but it also inherited an economy that was one of the poorest in the world with very little industrial production basically non-existent infrastructure and mostly illiterate population in order to change that india's first prime minister decided to take a radical step instead of following the western model and adopting economic liberalism and free market as most newly independent countries did he looked for an inspiration to the east as a passionate socialist he decided to partially take an inspiration from the soviet union and create a new economic model for india inspired by the soviet central planning but without completely destroying the private sector in practice this meant that the state nationalized all key sectors of the economy steel mining machine tools water telecommunications insurance energy banking and turned them into state-owned companies it also heavily regulated private businesses to the point that they would need permission of up to 80 different government agencies if they wanted to produce anything for example and the government would say how much of what they can make and the economy was managed through five-year plans as it was in the soviet union and the eastern bloc which would regulate everything that happens in the economy for the next five years from which sector needs to grow down to how many products should be made by an individual company in a given year the idea was that this would be the best way to lift india out of poverty and establish it as an independent state after its colonial history but in reality it proved to be just as dysfunctional as the soviet model the five-year plans stopped the private sector from evolving and innovating making it slow and inefficient and the state-owned companies had a notoriously bad management they were riddled with corruption and never managed to be profitable when asked about it the indian prime minister famously responded by saying that profit is a dirty word and that they shouldn't care about it as a result in the decades after it gained independence india remained a largely undeveloped poor country even though its economy grew it only grew by two or three percent on average while other asian countries that chose to follow the more capitalistic models were seeing growth in double digits at the same time but then in 1991 things changed today even historians may have trouble describing a day when mikhail gorbachev resigned as the president of a soviet union which had already ceased to exist in 1981 the soviet union which was india's biggest trading partner finally collapsed and its economy went down with it the impact of that along with other pre-existing issues sent india into a full-on economic crisis and unable to pay back its loans the country was heading towards a bankruptcy to avoid that it had to take a giant loan from the imf but this loan came with a condition that the indian economy will go through a major liberalization it had to let go of its central planned model its regulations and it had to open up to the world india did that and soon enough foreign companies which were previously blocked from doing business in india were rushing in to take advantage of its cheap labor and numerous engineers and building factories and i.t departments and call centers all over the country basically the world started to outsource anything it needed to india and this in turn gave birth to numerous indian companies especially in the it sector that were satisfying this demand together with a gigantic domestic market and an ever-growing population all of this started an economic boom that's been just getting faster and faster ever since but here is where it gets tricky although on paper the economy is growing and things are getting better the daily reality for many people in the country doesn't really reflect that and this is not just my assumption that's what many surveys and data are saying according to gallup opinion polls while the indian economy has been booming in the past 20 years the satisfaction of indians with their personal economic situation and their quality of life has been going down every year according to gallup only three percent of the indian population describe their situation as thriving which puts india among the lowest in the entire global database and overall life satisfaction in india is so low that it puts it among the top 10 unhappiest countries much lower than countries like iraq libya ethiopia or pakistan in other words although the economy is doing great more than 90 percent of indians feel that their personal situation is getting worse and worse but why and how is that even possible according to surveys and opinion polls there are two main reasons why most indians are struggling and the first one is maybe surprisingly unemployment the unemployment rate in india was for years around five to six percent which although is higher than in the us or the uk is roughly the same as in canada and much lower than in many european countries and so on the surface it doesn't seem that bad but when you dig deeper it starts to look different the point is that in india about 90 of all jobs are in what's called an informal sector those jobs include anything from farm and construction workers to cleaners taxi drivers and shopkeepers but the point is that none of those people have regular contracts these informal jobs are not permanent and the people in the informal sector have a very low pay and no career growth stability or job security so even though people have jobs the jobs they have put simply suck they don't pay enough to pay for a decent living and they don't offer any kind of safety or prospects for the future meaning that even though the people in the informal sector can survive from day to day and they are technically employed they remain poor and obviously unhappy but even for people with college education who are competing for the qualified better paid and more stable jobs the situation is really bad in fact unemployment rate is the highest among people with college degrees 20 of them are unemployed which is much higher than for less educated people and that's especially surprising since young people in india tend to study stem subjects especially engineering and computer science which should be in demand but instead the country is filled with millions of unemployed engineers but how is that possible well this is because the value of higher education in india especially technical has largely disappeared in the 1990s there were not many people with engineering degrees since there was only a handful of elite higher education institutions producing a small number of well-trained engineers that then had a guaranteed good job after graduation but since india went through the liberalization thousands of private colleges appeared around the country handing out degrees left and right and since engineering degree guaranteed a good life everyone wanted it and the private institutions provided that but once private colleges often providing a very low quality education started churning out millions of poorly qualified engineers the supply outgrew the demand and an engineering degree and a college degree in general became kind of worthless the point is that there are simply not enough new jobs being created in india and the country has been experiencing what's called a jobless growth india's economy is growing mostly because its businesses are becoming more efficient and they are increasing their productivity not because they would be expanding so much which means that not that many new jobs are being created but because of india's fast population growth the labor force expands by millions of new workers looking for jobs every year but there are simply not enough of those the situation is so bad that it often results in bizarre situations when absurd amounts of people apply for those few regular jobs that are available in 2022 the indian railways were hiring for 35 000 job positions which sounds like a lot except for the fact that they received 12 million applications for those 35 000 job positions and most of these openings were for jobs like train station guards and in 2019 100 000 people applied for 62 positions of telephone messengers at the local police force in the indian state of uttar pradesh and even though the only qualification for these jobs was the ability to ride a bike 3700 people with phd degrees applied anyway on top of that india's economic growth is accompanied by another issue which is growing inequality according to the world inequality report india is one of the most unequal countries for both income and wealth inequality and even more importantly in recent years it has seen more rapid increase of inequality than any other country but that is an indicator that the benefits of the growing economy are not distributed evenly and that most of those are going to a small group of the already rich and it's not that inequality would be morally or ethically wrong instead high inequality is dangerous for progress and development of any country in the long term high levels of inequality stifle growth and they break down social cohesion and create divided resentful societies and in india this fits the picture perfectly if an economic growth doesn't translate into improving the everyday reality of the majority of people and if its benefits don't trickle down but they only help a small segment of the population then it doesn't really matter and in india's case well that's exactly what's going on

Channel: Explained with Dom

Views: 434,360

Keywords: dark side of india, indian economic boom, indian economy, why is india growing so fast, why are there so many engineers in india, why indian economy going down, why india has so much inequality, why is there so much unemployment in india, unemployment india, india inequality, india economy problems

Id: W0QuOku3LRo

Length: 11min 48sec (708 seconds)

Published: Fri Jul 08 2022