It has been argued by some that increased penetration of technology and industrialization has led to increase in inequality in India, however the reasons for the same lie somewhere else. Critically analyze.

India has been lagging in various inequality indices (like Gender Inequality Index, Inequality Adjusted Human Development Index, increasing GINI’s coefficient) and failing to provide growth for all.

Some argue this as a consequence of technology and industrialization.

Their argument is:

  • Penetration of technology has led to gains for some but losses for many. E.g. an employer gains but some employees are fired when a new machine is introduced.
  • Technology-led growth can be harmful for a populated country like India. Inequality will certainly grow more with increased mechanization.
  • Services sector contributes about 55% but employees proportionally very less people leading to reinforcement of inequality.
  • Industrialisation has led to class divide which is increasingly benefitting capitalists over the working class.
  • The minimalist intervention approach might be harming India since 1991 and its effects are visible.
  • GINI’s coefficient has been rising since 1980s, which supports the arguments.

However, the argument is not entirely correct.

Counter arguments are:

  • Problem lies in the policy focus more than the access to technology.
  • Technology penetration in India is not that deep even today. Agriculture is highly subsistent even now.
  • Industrialisation has increased the jobs and led to inclusive growth in economies of East Asia. Hence, at this critical juncture of India still not being properly industrialized, the argument doesn’t hold good.
  • Labour intensive sector are languishing due to lack of support and inability to tap market. Hence, the cause might be something else.
  • Skill development in India is very lean (more than 85% of working class is not properly skilled). So, major challenge lies in industry oriented skilling.

Focus of policy should be on pulling the people up from poverty and avoiding stagnation of growth of middle class. Inclusive Growth needs the integrated framework which involves state and private sector.

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