India’s informal economy
DOI link for India’s informal economy
India’s informal economy book
In recent years, mainstream accounts of India’s economy have wavered between puffed-up optimism and weary disappointment. Near the beginning of the century, India was lumped into the group of ‘BRIC’ economies (Brazil, Russia, India and China), each with the potential to challenge the United States, Japan and Europe as global economic powers (Wilson and Purushothaman, 2003). Excited business academics even argued that India, with its huge domestic market, youthful demographic and democratic political institutions, could eventually overtake China to lead the pack of emerging economies (Khanna and Huang, 2003). India’s prosperous new economy was supposedly spearheaded by dynamic new industries like IT and business services (Friedman, 2006). There is no doubt, India has shifted from a comparatively low-growth to a high-growth economy since the 1970s. Rising growth has clearly been influenced by the gradual ‘liberalisation’ of trade and investment during this period, including ‘neoliberal’ economic reforms implemented in 1991.1 Between 2000 and 2010, the yearly average for economic growth per capita was 6 per cent, up from 3.7 per cent in the 1990s and 3 per cent in the 1980s. By comparison, average growth was 2 per cent in the 1950s, 1.5 per cent in the 1960s and 0.9 per cent in the 1970s.2 In the four years to 2007-08, India was the second-fastest growing major economy in the world. But since the Great Recession began in the West in 2007-08, Indian economic growth has declined significantly, even though it remains high by historical standards. Neoliberal scholars have been quick to point to ongoing barriers to prosperity like inadequate transport infrastructure, poor school education and ‘inflexible’ labour laws (Ahluwalia, 2011). Price inflation has been on the rise. The Wholesale Price Index, which gives a useful indication of price changes in agriculture and food, rose to 9.6 and 8.9 per cent in 2010-11 and 2011-12 respectively. This compares to a yearly average of 5.9 per cent between 1994 and 2005.3 Higher food and fuel prices have made life much harder in a country where millions remain in poverty. Most recently, India’s exposure to the stagnating world economy led to balance-of-payments instability, with the value of Rupee dipping sharply in mid-2013, pushing living costs even higher (Ghosh, 2013). Despite a number of new policies, the failure of government to ameliorate these problems has influenced major changes in the political landscape.