Capitalism has guided the world economy to unprecedented prosperity. However, it often encourages shortsightedness and contributes to wide disparities between the rich and the poor. In this light, would it be correct to believe and adopt capitalism driving inclusive growth in India? Discuss. [UPSC-2014]
Communism has proved an unprecedented failure as far as economic policies are being considered. India, with its unique mix of capitalism and socialism, failed to prop up its economy till it fully embraced capitalism. Capitalism has emerged as preferred ideology by which to guide economics by mere mode of elimination since it is the best of those available. The flaws of capitalism, however, cannot be denied. But, capitalism has proved an effective method of creating wealth and prosperity and this cannot be ignored. Thus, instead of dismissing capitalism in itself, it would be more rational to adopt capitalism and then take measures to counter its adverse side-effects.
Admittedly, capitalism has led to increased inequality. Measures must be taken to limit the modes by which the rich keep getting richer and poor poorer. Capitalism combined with a strong regulatory state could keep growing disparities in check by redistribution of wealth. The state can act as the party that protects the interests of the public at large by limiting the negative after-effects of capitalism and regulating the same. While capitalism propels growth and provides job opportunities, the state must take upon itself the role of ensuring that the benefits of such growth and job opportunities reach all the people. While capitalist interests does not concern itself with the marginalised sections of society, the state can encourage capitalism in the economy to a rational extent and focus on ensuring that the ensuing growth is inclusive.