A progressive era for India?

The primary focus of development policy must shift decisively to expanding opportunities for the underprivileged

- NITIN DESAI

The recent election results show that the electorate of India has not shared fully the widely publicised optimism about our present and future economy. Not that there is no recognition of the continuing growth of the economy. A person who surveyed individuals in Uttar Pradesh (UP) reported that when asked about their economic condition, they often said: "Yes, the economy is doing well, but we are not better off!" This discrepancy between growth and income opportunities for the underprivileged is at the heart of the people's assessment of policy performance.

The three decades since the liberalisation reforms of 1991 have seen the Indian economy growing at around 6 per cent per year, with its gross domestic product (GDP) increasing sixfold between 1990-91 and 2023-24. One measure of this is the purchasing power parity estimate of India's GDP, which according to the recent assessment made by the World Bank, is $10 trillion or about 7.2 per cent of the global GDP.

With the sixfold rise in GDP, absolute poverty has come down. But we have also seen a rise in inequality. According to estimates in the World Inequality Database, the share of the richest 10 per cent in total national income has gone up from 35 per cent in 1992 to 58 per cent in 2022, with the share of the richest 1 per cent going up from 10 per cent to 23 per cent over this period. At the other end, the share of the bottom 50 per cent has fallen from 22 per cent in 1992 to 15 per cent in 2022. When it comes to wealth distribution, the scale of inequality is even higher.

The development strategy of this era has focussed on the liberalisation of private and foreign investment and related institutional reforms. But it has also involved official favouritism for some corporations and their rapid expansion to the top. Today, the top 10 corporations account for 22 per cent, and the top 100 corporations for 64 per cent of the total market capitalisation of over 5,000 listed corporations.