Inclusive. Remember this word, you will be hearing it many times in coming months. From all sorts of folks, politicians to business leaders. Because suddenly realisation is drawing that the last couple of years of runaway growth and prosperity has not resulted in inclusive growth. Rather only in a few getting wealthier.
Even China gets worried about such things so presumably we should be too. That we not only do not have inclusive growth but we have runaway inflation from rising prices of goods and services. I now understand that finance minister P Chidambaram and his team have been furiously reworking their Union Budget 2007 proposals so as to ensure that there are more specific steps to fight inflation.
And yet I wonder why we did not see it coming. We all got caught in the great India Shining mirage three years ago and vowed that we would always watch out for such signals. And yet we've had a near encore. Forget wheat prices and onion prices. Real estate prices have doubled in many parts of India in the last 18 months. What's the general reaction ? Jubiliation, because somehow we think this is a reason to celebrate rather than worry.
Rising Prices, Time To Celebrate
So instead of figuring out how to step in and control prices, the government almost took pride in the fact that prices were rising and no one was affected. Because we are a growing economy. Turns out we are growing but not quite the manner in which we thought we were. So voters are already voting with their feet as they have done in the states of Punjab and Uttaranchal. And suddenly, whether or not rising prices are the reason, politicians are scurrying around trying to put together dossiers of anti-inflation measures.
Sure the Reserve Bank has been stepping in and hiking interest rates. But then, monetary tools can only do that much. A friend from Coimbatore told me that his company had to go out of the city to expand their factory. Because land prices were ridiculous. Which means thousands of jobs would go to some other place instead of Coimbatore. But prices in this smaller town in Tamil Nadu had shot up as well. The project was looking less viable now, he said.
What does all this mean ? Quite simply, we can grow only when the critical factors of production and supply are in our control. When demand overshoots supply then you have overheating. And things don't just cool off nicely, sometimes they just collapse. The Economist hinted at that in a cover story recently. And everyone pounced on The Economist saying they got it wrong. Well, well.
Are We Not Growing ?
So are we not a growing economy ? Of course we are. But as I never fail to point out, not all of us are growing. Industry is doing well, IT is doing better but to many hundreds of millions, it will be a long while before there is any change in their lives. So, inclusion is an important word to remember.
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