For India to prosper, we must raise the purchasing power of the masses. This has not been dealt with

The Union Budget is disappointing, directionless and unrealistic, even though the Government claims that it will make India “atmanirbhar (self-reliant).” It lays emphasis on healthcare, building some highways and Metros (especially in States where elections will be held shortly) and disinvestment of Public Sector Undertakings. But what will all these measures accomplish if people don’t have jobs, money and food? The ongoing farmers’ agitation reveals the terrible crisis in the agricultural sector of our economy. Thousands of farmers committed suicide because they were not getting adequate remuneration for their produce and were deep in debt. In almost all countries agriculture is subsidised — even in the most advanced and prosperous country like the US. One can survive without a car, a TV set, airconditioner or other industrial products but food, like air and water, is essential for life. Hence, agriculture is very different from other industries as people’s survival depends on it. Cultivation has to be done and since modern farming cannot be done without subsidy, the State must ensure that farmers get an adequate remuneration for their produce. For this, the Minimum Support Price (MSP) must be given to all farmers (not just a select few), but this has not been addressed either by the three laws against which the farmers are agitating, nor in the Union Budget.

In recent months, the Indian economy has tanked, with a sharp downturn in both manufacturing and sales. The automobile industry, the real estate sector and so on, are in the dumps. Massive lay-offs have taken place even as unemployment has reached record heights.

What, then, is the real way out of this economic crisis? The way out is not only giving MSP to farmers but also rapid industrialisation of the country, as that alone can create the millions of jobs needed to wipe out unemployment and generate the wealth required for the welfare of the people. However, there is a basic hurdle to rapid industrialisation: While there is no difficulty in increasing production, the goods will not be sold because the people have little purchasing power.

India today is not the India of 1947. At that time we had few industries and few engineers because the policy of the British was broadly to keep us feudal and unindustrialised. After Independence, however, there was a limited degree of industrialisation and today we have thousands of engineers, technicians and scientists alongside immense natural resources. With these, we can easily step up production.

The problem, however, is not how to increase production but how to raise the purchasing power of the masses. In 1914, Henry Ford raised the wages of his workers from $2.25 to $5 per day. That was done to stabilise his workforce, but it did raise the purchasing power of the masses as other US manufacturers were compelled to do the same. In the Soviet Union, the Government fixed the prices of all commodities and every two years or so lowered them by 5-10 per cent, and sometimes wages were also increased by 5-10 per cent. Even with the same wage, the worker could now buy more goods, as prices were reduced regularly. This way, the purchasing power of the Russian masses was increased by State action. Simultaneously, production was also stepped up and more goods could be sold as people had more purchasing power. This process went on steadily after 1928, resulting in the rapid expansion of the Soviet economy and the creation of millions of jobs, wiping out unemployment. I am not saying we must adopt the Soviet model, but for India to prosper we must raise the purchasing power of the masses. This has not been seriously addressed in the Budget.

(The writer is a former judge of the Supreme Court of India. The views expressed are personal.)