The basic problem of the country is not how to increase production but how to raise the purchasing power of the Indian masses.
With our huge pool of competent engineers and scientists, and our huge natural resources, we can easily increase production several times. The problem, however, is that of sale of these goods produced. 80% of our people are so poor that they do not have the purchasing power to buy these goods. This is particularly so in view of the high prices of basic requirements like food, which eat up most of the income of most people. Where is the money to buy other goods ? And unless the people have money to buy these goods there will be a glut in the market as the goods will remain unsold.
In classical economics there was a law called Say's Law, named after the French thinker Jean Baptiste Say ( 1767-1832) which said " Supply creates its own demand". This was disproved by the British economist John Maynard Keynes ( 1883-1946) in his famous book ' The General Theory of Employment, Interest and Money' ( in brief known as 'The General Theory'), published during the Great Depression of 1929-1939.
So our thinkers must seriously consider and find out a viable solution to the problem of how to raise the purchasing power of the Indian masses.
