China Slows India Grows?
Anindya Bhattacharya
The recent slowdown in the Chinese economy is being poised as a cheer for India! The ruling elite of our country seems to be applauding that whatever negative is happening in China will be positive for us. They have already started banging that as the macro fundamentals of our country are strong enough, especially the foreign reserve, the problems erupting in China would actually create a scope for us to come up in the deserted space.
In fact, this is true to some extent. The capital market in the Indian economy would certainly gain in some sense. The relative macro-economic stability of our country would pave the way for the international capital to intrude into our economy and the market would be boosted eventually. But does that imply any betterment for the entire population of our country?
When the business magazines, the mainstream media and the international fund bodies talk about economics, they mean either boom or crash of the capital market. They talk of ‘growth’, ‘rate of growth’ and ‘GDP’. Yes, these categories have some implications to the entrepreneurs but in the long run carry no sense to the commoners. We need to understand that India is basically a labour market where the 3/4th of its population are cheap labourers. The paradox is: when you have 3/4th of the population as labour, the remaining 1/4th would be the consumers who thrive on this cheap labour. And India being a vast country with 1.21 billion population, about 0.3 billion consumers are fair enough for the international capital to cash in. Therefore, the Wall Street Journal is always there to approve!
Somebody may wish, well, if capital market boosts then the wage cost would rise as well. But that has always been proved as a wishful thinking! With a rise in average wage in the 3/4th segment of the population the consumer market cannot flourish. You would have to sustain a low wage mechanism in the labour market to have a higher growth rate in the capital and consumer market. So, when China is slipping, Indian capital market can rejoice but not the majority countrymen!
Anindya Bhattacharya
The recent slowdown in the Chinese economy is being poised as a cheer for India! The ruling elite of our country seems to be applauding that whatever negative is happening in China will be positive for us. They have already started banging that as the macro fundamentals of our country are strong enough, especially the foreign reserve, the problems erupting in China would actually create a scope for us to come up in the deserted space.
In fact, this is true to some extent. The capital market in the Indian economy would certainly gain in some sense. The relative macro-economic stability of our country would pave the way for the international capital to intrude into our economy and the market would be boosted eventually. But does that imply any betterment for the entire population of our country?
When the business magazines, the mainstream media and the international fund bodies talk about economics, they mean either boom or crash of the capital market. They talk of ‘growth’, ‘rate of growth’ and ‘GDP’. Yes, these categories have some implications to the entrepreneurs but in the long run carry no sense to the commoners. We need to understand that India is basically a labour market where the 3/4th of its population are cheap labourers. The paradox is: when you have 3/4th of the population as labour, the remaining 1/4th would be the consumers who thrive on this cheap labour. And India being a vast country with 1.21 billion population, about 0.3 billion consumers are fair enough for the international capital to cash in. Therefore, the Wall Street Journal is always there to approve!
Somebody may wish, well, if capital market boosts then the wage cost would rise as well. But that has always been proved as a wishful thinking! With a rise in average wage in the 3/4th segment of the population the consumer market cannot flourish. You would have to sustain a low wage mechanism in the labour market to have a higher growth rate in the capital and consumer market. So, when China is slipping, Indian capital market can rejoice but not the majority countrymen!
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