Economic Development in India: the Informal Sectors as well as the Financial Economy - Research Paper Example

Introduction Economic development depends on the approach adopted by the policy makers in influencing development initiative. Emerging literature about economic state of India has explored the development of middle class, the marginalized, and the poor. Scholarship on the economic state of India project a regime of exploitation as well as exclusion of the poor. In essence, the approach promotes a wide social gap where a few rich people infringe or rule over the majority poor. Most critics contributing to the economic development notion settles that socio-political pattern is instrumental in defining development. The right-based approach, for instance, argues in favor of a development system that balances between the political system and social needs to achieve equitable distribution of resources. Critics of traditional systems of development have pointed the inequality as a factor that influences development (Ruparelia, 2011:234-240). In this sense, the paper would look at economic development as a broad subject that requires the participation of the government through political influence as well as the community through their efforts. Social Disparity Social theorists have attempted to explain the economic gap that is rampant in India despite India’s economic growth. The critics have pointed social Darwinism as a factor that has contributed to the growing socio-economic gap (Huang and Khanna, 2003:78-80). According to this perspective, the elites promote social systems that predispose the poor and the marginalized to deplorable conditions. However, some critics point on right based approach in tackling the menace of inequality. The approach takes into consideration the following factors, the paradigms that influence development and the oppressive practices that contributed to the present conditions. The move adopted will then address these influences by addressing a particular need that the society or the community has lacked. For instance, development of laws that influence equal distribution of property attempts to improve the current condition of the underserved communities. Right based approach to development emphasis on the need to respect the dignity of an individual as well as elevating the barriers, which influence the upholding of these dignities. On the contrary, scholarship on the India’s economic development situation has pointed on draconic efforts, which have drove hawkers out of the streets, demolished slums, and removed pavements as some of the means of keeping the Indian cities from unwanted economic activities. A glance at the social development agenda enshrined in the UN agenda tends to advocate for better conditions of life that would only come true if the society develops a mechanism, which uphold the rights to humanity (Ruparelia, et.al. 2011:234-240). The right based approach is essential in the campaign for societal development because it influence welfare system that the society would adopt in creating equality in the society. Critics have observed that attempt to improve individual lifestyle without the influence of the government policy might not yield much because of the process is not sustainable (Cooper, 2007: 186-87). Policies regarding equality in job places or in initiating community development have contributed to the growth of various sectors of the economy. For instance, policies, which influence taxation, influence the growth of the society because they do not address the needs of people suffering from one need or the other but it creates legality in the whole process. Attempts by Indian authority to create a sustainable society have projected its efforts towards respecting the rights of every individual as well as using the political influence to institute movement that would generate equal benefit to the society. For instance, the government policy on education seeks to benefit the whole community or country irrespective of the individual status (Cooper, 2007: 186-87). The freedom code subjects the government to protect its people against unjust practices. The efforts to build a society are not an individual activity but it involves the whole society. This means that when the government takes the right based approach it would offer opportunity to the society according to the needs stipulated in the individual’s right. The struggle against tyrannical system traced their roots from inequitable distributions of resources, which subjected some parts of the continent to economic retrogression. Neoliberal Urban Policy The demographic patterns indicate that many people tend to jostle for houses, social amenities, food, and transport among other primary needs as they dwell and work in the city. The central factor behind the city life is the urge to earn a better life. The industrialization era for instance, brought great changes to people’s lives because it influences the income that people derived through their labor (Cooper, 2007: 186-87). Thus, the industrial era created an opportunity for the society to derive income from the activities of the industries. However, some critics believe that inequality which results from economic activities make human liberty hollow because an individual could not claim to be free when he has no source of income or when the individual has no capacity to contribute towards the economic growth. Underserved communities fall into the category of people who do not enjoy any liberty because they do not have the ability to change their lives. Creation of an industry in a society does not only improve the standard of living of that community, but also it influences the growth of the entire community (Cooper, 2007: 186-87). The rights to better life are evident when an individual has the ability to acquire that better life condition from the society. Right activists perception suggest that the contribution made by the government in advancing the rights of her people is through creation of economically generating activities, which enable the community to derive their livelihood (Cooper, 2007: 186-87). For instance, the creation of industries and the distribution influenced the growth of the communities in the following areas economically, socially and politically. In essence, the economic power of a given region depends on the number of economic resources that generate income in these regions. When the resources are adequate, the society is able to influence its political power as well as other social activities, which influence human life. For example, during the industrialization era, many people sought jobs in the industries leading to creation of other social and economic opportunities in those areas as well as the general development of the rights to humanity (Cooper, 2007: 186-87). The proponents of the neoliberal urban policy contend that the policy aims at promoting equitable distribution of wealth among the urban poor. In addition, engaging the community and voluntary associations in fighting abject poverty serves to change the economic trends of the people living in the urban set up. Economic resource allocation is very critical to social lives because it influence acquisition of human rights. For instance, policies, which influence trade, may hinder acquisition of human rights such as right to health. This is due to the influence that the policy would exert in relation to acquisition of the right. Since human health depend on trend of foodstuff supply, the relationship between these factors would have an overall impact to the lives of common persons. Moves towards Creating Enabling Environment for Business The state of economy of a particular region would dictate the life conditions of that particular region. For example, industrialization led to improvement of security, healthcare services among other human rights needs. In this sense, economic inequality would influence human rights by denying opportunity to acquisition of these rights. Social growth that the society attains depends on economic activities within the society that boost this growth. Marginalized communities site economic marginalization as factor that contributes to their poor condition (Chibber, 2003:78-89). The essence of the argument tend to project the influence of a given state of economic activities would create in the society. Some critics contributing to the economic development of India believe the government has not exploited all the avenues that would help in changing the economic situation of the people (Chibber, 2003:78-89). According to this school of thought, creation of an enabling environment would help in transforming the state of urban life. One of the areas that critics tend to point on is efficient management of the cities. The establishment of autonomous institutions in the city will create an enabling environment for the public and private sector. Consequently, the cities would register growth because of the commercial activities taking place. Generally, sound economic plans are critical in defining growth the urban areas. In attempts to develop such plans, all the stakeholders should contribute to the agenda. Theories Explaining the Disparity Patterns Rawl’s view of primary goods posits that they are critical or central to human freedom (Kohli, 2004). The existence of any human being depends on these goods. The argument tends to influence the economists view of goods. The distinction between the primary goods and other types of goods tend to influence the economic development in the society. It means that economic goods in the sense of Rawl must be either primary or secondary. Since the primary goods are essential as human basic freedom, human beings cannot do without them. The Indian government system, policies on economic goods tend to influence the distribution of the primary goods in relation to satisfying the human rights. An individual does not have a choice when it comes to attending to the needs of basic right. Life traces its root from these rights thus; the conditions that influence these rights must be subject to control. Social critics views the primary goods as factors that will influence an individual ability to achieve the desired goals in life (Chibber, 2003:78-89). This argument tends to coincide with economists view of primary goods. The essentiality of these goods steers the society to the next level. The right to life is as primary as the basic goods. The focus that an individual may project in the society would depend on the ability to achieve the basic items. Theories about human needs tend to address the need to satisfy the basic needs as opposed to other needs (Huang and Khanna, 2003:74-80). The primary needs affect the lives of every individual as opposed to other needs within the society. Conversely, this behavior of the primary goods would influence attempts to initiate economic development in the society. For instance, people tend to work to satisfy the primary needs first before thinking of the other needs in the hierarchy of needs. As the satisfaction of the basic needs progresses, an individual would think of satisfying the other needs. The categorization of goods influences the pricing control by government agencies. For instance, government commands a great control on the primary products such as foodstuffs and medicine because they influence the lives of the people. This does not mean that other goods are less essential but prioritization influences the mode of satisfaction. The social perspective has an influence on the approach that the government designs its policies regarding the distribution of the basic goods (Chibber, 2003:78-89). For instance, the government might decide to withdraw levies on basic commodities because of the greater good of serving the interest of the majority of the society. Such tax holiday tend to influence the prices of other luxurious goods. For instance, when the government responds to food shortages it might scrap policies that influence importation of such product in order to boost the supply of these products in the market. Largely, the choice depends on the influence that the food shortage would create to the growth of the economy. For instance, the shortage of primary goods would interfere with the cost of living. Thus, the government would cushion her people from suffering the adversity of the above effects. The capability perspective argues in favor of an individual who settles to pursue his personal interest which a view attaining a valuable state. The proposal is a quite possible owing to the fact that many people who identify the pressing needs in the society are able to pursue these interests for the well-being of the society. Many critics believe the capability approach is multidimensional because it has broad concerns, which it addresses (Huang and Khanna, 2003:78-80). These concerns could be difficult to attain because of the complexity involved in creating a framework of achieving the capabilities. The social capability model proposes the use of the capabilities and the available resources to create some functionality in the society. The economists’ view to this perspective offers an opportunity for exploring the extent to which the capability approach could attain some operation. Freedom steers the society to the level that it seeks to attain because the room created by freedom permits individual to develop alternative approaches of undertaking the daily chores (Chibber, 2003:78-89). The society could not purport to be development oriented when it infringes of the rights of the people. Unlocking the potential of the society require diverse views in an environment that allows experiment. Since Sen does not provide a framework for pursuing the capabilities, it is upon the society to create a framework of evaluating the approaches they take towards achieving the desired needs. For instance, economic growth depends on a number of factors that include financial innovation. The financial innovation that the society has operationalized is because of the greater freedom by using the existing resources and capabilities to create the desired result. The nature of capabilities described by Sen is within the reach of the immediate society; however, they depend on the immediate demands that the society has. For instance, the ground for international trade traces its root from the demands exerted by the society. These demands necessitated the lifting of the global barriers that influenced the acquisition of the desired freedom in the global scale hence, operationalization of the Sen Capability approach. The operationalization of the Sen Capability approach depends on the context, which defines the desired demand (Hickey and Mitlin, 2009:145). For example, a demand in a monopolized market is to lift the factors that promote monopolization. This would enable the society to move towards acquiring the freedom of utilizing the existing resources for the well-being of the society. Boundaries within the society define the amount of freedom that a person commands. Within a given boundary, the given community will learn to exercise their opportunity within a defined range. However, the lifting of these boundaries opens room for sharing knowledge and other valuable resources, which would influence the utilization of the capabilities. The social groups exist by virtue that they share some similar characteristics. The urge to introduce new characteristics within a social condition must borrow from other sources. Thus, the capability and the resources within the given society would be functional when ideas from outside sources come into use. The tool that has led the society towards innovation is the demand within a given society (Kohli, 2004:121-136). However, social attributes, which promote coexistence, have promoted the interest of the society beyond the given boundary. The above argument favors the operationalization of Sen’s capability approach. Critics believe that resource allocation influences poverty prevalence in the society (Chibber, 2003:78-89). It is evident that the amount of resources that a given society commands will influence their approach towards poverty elevation. Ironically, some resource rich community lavish in deep poverty. This means that the existing legislation does not favor the fight against poverty in that particular area. However, traditional welfare view attracts criticism because it does not aim at stumping poverty by targeting a given group. Social critics define societal groups in terms of the amount of wealth they command or in terms of poverty scourge (Kohli, 2004:121-136). Traditional welfare view influences the approach that policy makers take because it would make it quite intricate to address poverty on a vast scale. For instance, inequality in the society occurs due to the resource allocation bias. The bias depends on policies, which influence target regions where poverty is rampant. It is probable that a region may comprise of rich families, however, the same community might not miss poor individuals. The measure given to societal inequality usually assesses the ability of individuals through the poverty survey (McCartney, 2004:36-67). By interpreting the inequality of a given group within the society resource allocation would address the poverty effects. Many critics contend that the traditional approach to inequality subjects the whole society to a particular level. This means that addressing inequality in the society using the traditional welfare would subject the society to equal resource allocation, which will not solve but would promote the existence of poverty in the society. Failure to consider the measurement in resource allocation makes the traditional system ineffective in addressing poverty. When a poor society gets the resources they will strive attain a given standard. However, directing these resources equally would widen the gap between the poor and the haves. Many critics believe that resource allocation is subject to political manipulation (Kohli, 2004:121-136). Conversely, good political manipulation would adopt a measurable approach where resource allocation considers the differences in equality level before disbarment. Social theorists suggest have suggested alternative approach to traditional welfare approach. The spread of inequality across the global is due to the approach that the society takes when targeting to stump the influence of the inequality. For instance, the unemployment inequality is a concern that many societies have sought to address. An approach that does not consider a given group in allocating employment opportunity might lock the underserved group because it would deny the group any substantial benefits. Most policies addressing inequality in the society tend to measure the trend of the inequality in question before developing a system of addressing it. For instance, societies where schools are not popular need to get a large share of resources in building new projects as opposed to allocating similar resources to society that are operational. Measures such as economic growth determine the rate of inequality that exists in the society. Many critics believe that the approach adapted in addressing inequality in the society determine the level of change that the society would receive (Kohli, 2004:121-136). The market outcomes as well as social trends are critical in designing the appropriate method of handling inequality in the society. Cultural trends have promoted inequality in the India (Kohli, 2004:121-136). The common view propagated by the Indian culture is the view that people belong to various caste. Critics believe that exercising justness in the fight against inequality must address sociological concerns as shaped by cultural trends (Kohli, 2004:121-136). The knowledge of how the inequality arose is very critical. For instance, economic inequality across gender bias emanated from cultural practices that sidelined a given group. An approach used in addressing this difference would take a particular approach because it intends to create a particular outcome out a given group. It would be ill to target the same group with the special concern as the whole society. Trends adopted by the non-governmental bodies in addressing poverty rely of measurements. The reason behind this is to elevate the present condition of the given group in order to attain the desired status. The identification of the individual need makes the fight against poverty easy because it would help in addressing specific concern. Some critics argue that it would be ill to group the whole community together without visiting individuals’ views or factors that promote a given condition within a particular environment (Kohli, 2004:121-136). The new welfare perspective in addressing poverty and inequality in the society argues in favor of resource allocation according the gravity of the need (McCartney, 2004:36-67). Thus, measurement of the inequality trends is not an option but a necessity in addressing inequality. Some practices in the society may promote poverty prevalence in a given society. This means that elimination of such practices would eradicate the menace of poverty. For instance, peasant farmers may enjoy good weather conditions but fail to conduct a sustainable agriculture because of the practices they employ in the farming. Reforming such society might requirement material resources but services resources like education about better practices (McCartney, 2004:36-67). It is arguable that reformation of this society would eventually create equality because the specific concern that influence they lives is no more. Successful societies have devised policies that aim at addressing a specific inequality need in a given environment. The social trends in the Indian society seem to concentrate in accumulating profit as opposed to the general societal growth. Profit intent is central factor that influence the approach taken in initiating a financial development. The creation of the financial intermediaries influences the nation’s economic growth. The flow of a country’s capital would depend on the infrastructural developments, a component that influences financial institutions. For instance, deregulations influence the capital flow in the financial sector, which in turns influences market trends. International market depends on globalization and other policy factors in order to be effective in its operation. The informal economy is a factor to consider when addressing financial growth. The measure of economic development takes into account all factors in the society that contributes towards the growth of that particular society. The resources within the society define the development level of the society; however, it does not project the economic growth of that society. The behavior of the financial economic factors such as income per capita, the growth in the country’s GDP, global market trends, national market trends and the financial market contribute to growth of the financial economy of the nation (McCartney, 2004: 36-57). However, the above projections do not necessarily mean that development of a country is not important. The above factors largely depend of the informal development a country. For instance, politics is very critical to financial growth because it defines the policies that the country would take with respect to international trade or trading in certain products. Conversely, financial system would influence the choices that the country develops in playing its politics because of the influence that financial growth has with respect to development in the informal sectors. In conclusion, economic development in India displays a regime of exploitation and economic disparity. Majority of persons living in the urban set up are poor. This tends to illustrate a economic growth that is selective as opposed to a general growth trend. A number of authors have evaluated the performance of players in the financial market and suggested that the measure of development would incorporate factors in the informal sectors as well as financial economy. It is arguable that priorities of a country would influence its development record as opposed to its performance in economy i.e. the choice to develop a given area of economy would project an overall effect of the development prowess of a country. Bibliography Chibber, V. 2003. Locked in place : state-building and late industrialization in India, Princeton, N.J.: Princeton University Press Cooper, Richard N. "China and India Learning from Each Other: Reforms and Policies for Sustained Growth/Dancing with Giants: China, India, and the Global Economy." Foreign Affairs 86, no. 6 (2007): 186-87. Hickey, S. and Mitlin, D. 2009. Rights-Based Approaches to Development: Exploring the Potential and Pitfalls. Connecticut: Kumarian Press. Huang, Y., and T. Khanna. "Can India Overtake China?" Foreign Policy 137 (2003): 74-81. Kohli, A. 2004. State-directed development: political power and industrialization in the global periphery: Cambridge University Press. Part III on India McCartney, Matthew. "'Episodes of Liberalisation' or 'the Logic of Capital': The Genesis of Liberalisation in India." In Economics Department Working Papers. London: School of Oriental and African Studies, London University, 2004 Ruparelia, Sanjay, Reddy, Sanjay, Harriss, John, &Corbridge, Stuart, eds., 2011. Understanding India's New Political Economy: A Great Transformation? Oxford: Routledge. Read More