Beyond The Pink Press

If  you are a regular reader of the business press in this country, you would know that there is a marked tendency to give a “positive spin” to most things. “All is well,” is a mantra often espoused.

But anyone who has some understanding of the Indian economy knows where to look for data and would know that beneath all the foundation and the lipstick, there are big cracks. And these cracks might soon start to hurt.
 
Mihir S. Sharma’s Restart is one big rant on those big cracks (Well, if the business press is not ranting, someone’s got to do so). Sample this: Every year up till 2030, 13 million Indians will enter the workforce. To give each one of them a job, jobs need to grow 3 per cent every year. Since 1991, they have been growing only at 1.6 per cent a year. In fact, as last financial year’s Economic Survey points out, for the shorter period between 2004 and 2011, job growth has been at a minuscule 0.5 per year a  year.
 

So, the pink papers may be jumping up and down about the large number of jobs being offered by firms at college campuses, the overall reality is different.

 

Then, there is the case of Indian agriculture employing too many people. As Sharma writes: “According to the last Census, in 2011, 55 per cent of India — over half — worked in agriculture. The sector, however, provided less than 15 per cent of India’s gross national product. So, in other words, farms employed most of India’s people but produced very little.” This has led to a situation where only 17 per cent of the people who  worked on farms survived only on money they made from their farm. Everyone else did some extra work.

The solution is to move people away from agriculture and into factories. Sharma suggests that the farmers understand this. Nevertheless, India is not building as many factories as it should. In fact, the manufacturing revolution has given this country a complete skip. As Sharma puts it: “We even sell the absence of a manufacturing sector as a brilliant innovation.”

And there are multiple reasons for why India does not really have a manufacturing sector. The labour laws are archaic, ensuring firms start small and continue to stay small. The crony capitalists are not used to paying for factors of production. And Indian politicians have never bothered to explain the importance of economic reform to the citizens.

If India’s demographic dividend has to remain a demographic dividend, this needs to be set right. Sharma goes into some detail explaining on what needs to be done.

To conclude, Restart is a good read for any one wanting to know about the real state of the Indian economy. On the flip side, in order to make the book read like an economic thriller, Sharma let’s the journalist in him override the economist in him and makes way too many generalisations. That could have been avoided. At the same time a book of this kind could have done with a little more data and number crunching. 

The writer is the author of Easy Money trilogy (Sage) [email protected]

(This story was published in BW | Businessworld Issue Dated 06-04-2015)