Sunday, May 24, 2009

Social Reforms and Economic Development

Mr. Swaminanthan Aiyar, talks about not to expect radical economic reforms from the government. Rather than that, it will be more focused on Social reforms like infrastructure, health, education, rural development etc. This has been the theme for the past 5 years and is on the agenda for the next 5 years too.
But there is no harm in following this route to economics success. Mr. Amartya Sen, in Argumentative Indian, points out the strong linkage between social opportunity and economic development. The most common notion is that economic development occurs when global trade happens in the country. This has been the case in India too specially with the IT sector. But as Mr. Sen points out, to be on par with the global competition we need to have quality products, which in turn requires more skilled and educated people. We need to be high in our efficiencies – for which we need less absenteeism and good health of people. Ultimately it boils down to how socially developed the country is.
The government is also right in focusing on rural development. In this environment of receding global demands, our local demand, especially from the rural sector has led to us maintaining a very good growth rate compared to the world. Everyone has realized the importance of that market at the bottom of the pyramid. And to sustain and develop that market, we need to shift the spotlight on them.
The mantra seems to exploit this linkage between the social and economic aspects. It may not give the magical and drastic reforms that the country is expecting but may lay a firm ground for the long term benefits of the country.

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