Sunday, 25 January 2015

Economic Humbug

 Some people say  that the Indian economy is growing, as shown by the fact that the stock market is booming, the IMF has projected that the Indian economy is poised to become the world's fastest growing economy in 2 years, an economist from MIT and another from Harvard Business School have predicted that India would overtake China, etc.

All this is humbug.

Firstly, I am not at all impressed by economists, whether they come from MIT, Harvard Business School or the London School of Economics. A lot of nonsense is taught in these institutions, instead of treating Economics as a science, and a lot of people from these institutions are arrogant fools instead of genuine scholars. What is important is what one has in his head, instead of displaying degrees from Harvard, Oxford, Cambridge, etc. I am least impressed by such degrees in Economics, which is a science which has been perverted by hirelings of the establishment posing to be scholars.
Secondly, I have repeatedly said that the basic problem of the Indian economy is not how to increase production but how to raise the purchasing power of the masses.

  We can increase production of any commodity any number of times because we have thousands of bright engineers, technicians, managers scientists etc, and we have immense natural resources. The problem, however, is that 75% of our people are so poor that they have no purchasing power. And even the 15-20% Indian middle class is having its purchasing power rapidly eroded by skyrocketing prices of foodstuffs, etc Foreign markets are saturated with Chinese consumer goods, and the Chinese have even penetrated a section of our markets. So how will the goods produced by this ' growing ' economy be sold ?

Thirdly, it is not enough that there is economic growth. The further question to ask is : who is getting the fruits of this growth ? Is it only a handful of big businessmen, or the Indian masses ?


  1. If u think of infinite growth in finite economy so either u r Insane or Economist.
    U r right Sir Purchasing Power and Domestic Saving should be considered as the growth of the economy rather than GDP and other useless things put by the degree holders mentioned above in today's Economy.

  2. Don't you think that increase in production leads to increase in purchasing power in an economy?

  3. You are right sir, in this regard capability approach given by Dr. Amartya Sent may help to solve the problem of distribution of resources. Recently Oxfam has already published that 1% of intire population of the world has more than 50% wealth of the world.

  4. I believe the scholars of Harvard, MIT or Oxford are taught the economies of developed nations like USA or that of Europeans countries where the poverty rate is very low. Therefore, their theories and formulae fail in third world countries like India where poverty rate is too high. So, its better to stop getting deluded by reports and surveys and believe what we see and experience.

  5. Production only increases in a scenario when there is demand pull....which may lead to inflation....and when there is money in the hand of the masses...

  6. Production only increases in a scenario when there is demand pull....which may lead to inflation....and when there is money in the hand of the masses...