Increasing Polarization is Harming India’s Economic Prospects


In a recent interview with the Press Trust of India (PTI) published on May 25, former advisor to the Government of India has given a timely warning against the increasing polarization in India’s society. Prof. Kaushik Basu, who  also served as chief economist at the World Bank, stated, “The rise in divisiveness and polarization in Indian society is sad not just in itself but because it is damaging the foundations of the nation’s  growth.”

He added, “A nation’s growth does not depend on economic policy alone. There is mounting evidence that trust among people is a big determinant of a nation’s economic success.”

Prof. Basu spoke about many aspects of India’s economy in this interview, including problems like youth unemployment being very high at 24%, retail inflation recording 7.8% rise in April ( 8 year high) and wholesale inflation rising at 15.08% in the same month (  24 year high), as well as the urgency of the government helping small entrepreneurs, farmers and workers.

While all these points about the state of the economy are important, it is somehow the remarks about the polarization which made the headlines. The reason is not far to seek—a growing number of people are very worried about this and the confirmation of these fears by a top economist was important in this context.

Till about 8 years ago India had a reasonably good record of integrating all communities, building on constitutional guarantees of equality and non-discrimination. However during the last 8 years, some vulnerable minorities having a significant presence in the country and economy have been feeling insecure and being discriminated against.

Their important role in the informal sector which provides the bulk of employment and among the working class is widely recognized, as is the value of their special skills. They have also filled important gaps in the economy which are not easy to replace.

With these significant sections feeling less secure and confidant, less willing to invest and to travel for work and business and less forward looking in general, they face higher levels of unemployment and economic distress and their contribution to economy gets adversely affected. This is also reflected in gaps in certain supply lines of goods and services in the economy, creating problems.

This however is only the more obvious aspect of the ways in which polarization and divisiveness have an adverse impact on economy. Prof. Kaushik has used the key word ‘trust’ while voicing his concerns. Whether trust is increasing or decreasing in a society has an important impact on its economic capabilities. What the economy contributes ultimately is not just the sum total of all individual contributions, it is more than that. What is very important is the level of trust, cooperation, togetherness and zeal among all people, the sense of a common cause and a wider unity.

The economy involves millions and millions of people working at their own level as well as in various relationships. The extent to which they feel encouraged and motivated by a feeling of togetherness, cooperation and common cause contributes to the synergy, strength and strong outcomes of the economy.

If unity based on equality and non-discrimination are emphasized in government policy, this helps to create greater stability  which is good also for business to grow, and this is likely to be reflected in better trade and investment as other countries are also more confidant to do business in such conditions. With more unity, stability and respect for human rights including rights of minorities, the overall standing of the country goes up and the country is likely to be sought out in several contexts, including those relating to economic cooperation and trade. The reverse is likely to happen if divisiveness and polarization are being promoted in society.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include A Day in 2071 and Man Over Machine.


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