India has to grapple with difficult world economic prospects, not so bright domestic growth, and an inflationary situation as it prepares to present its new budget. The World Bank foresees more inequality leading to socio-political unrest. India needs to feel concerned and rethink about ending the global woes.

The domestic industrial (Index of Industrial Production) growth has slowed down in November to 1.4 percent from 3.2 percent in October 2021. It is a matter of concern but it is almost in sync with the World Bank global economic growth forecast. The WB projecting a prickly slowdown says that growth in 2022 will sharply dip to 4.1 percent and 2023 to 3.2 percent indicating that the pandemic lockdown is creating an unequal world.

The WB projection for India is 8.3 percent in 2021-22, less than what the Reserve Bank of India estimated. It is less enthusiastic about the future as it finds the Indian growth to be at 6.8 percent in 2023-24. The present projections are over a negative minus 23.9 percent contraction in 2020-21.

The ongoing third wave of the pandemic, Omicron, is apparently to cast a long shadow. The National Statistic Office (NSO) finds retail inflation growing at 5.6 percent in December but it is over 14.6 percent wholesale price inflation. It means overall costs would be impinging government efforts at pacing up the economy with high deficits and borrowings. The cost of development, particularly infrastructure, is likely to go through the roof. For instance, the cost that was projected for Jewar airport in Noida in Uttar Pradesh has escalated in less than two years.

It calls for reviewing the economy with consideration of delinking with globalisation. India needs to insulate itself against global woes and misdemeanors for ensuring societal vibrancy. The global arbitration process is impacting the country on many deals and the latest in the Canadian court order attaching Air India assets.

The World Bank is concerned about growing inequality threatening to reverse historic development gains’ exposing millions of people worse off than they were three years ago. It is to close pathways to better education, health, and professional opportunities what its President says is a “permanent scar” on development and leads to socio-political unrest which governance structures, both domestic and global are ill-equipped to mediate.

The latest Indian numbers are a cause for concern as rising prices will put a greater squeeze on disposable incomes further affecting weakening aggregate demand. The third wave may add to the problems. The core inflation, almost constant at five percent since early 2020, is above six percent now. Non-core inflation has increased to five percent from 2.5 percent between September and December. Food inflation has risen to 4.1 percent from 1.9 percent in November. Almost all food item prices, including vegetables, are rising. Manufacturing has the most muted growth.

The economy is in the midst of anaemic investment and consumer demand, observes principal economist, Sunil Sinha of India Ratings. It is indicated by a fall in the capital and consumer demand fall of 3.7 percent and 5.6 percent in November 2021. The growth is yet to touch the pre-Covid-19 level.

The WB finds this as per the global trend. In the past two years Gini coefficient, the metric used to measure income inequality, increased on average by 0.3 points in 2020 and extreme poverty in 33 of the 34 countries by the World Bank. The gap between countries has increased even more. By 2023, all advanced economies are expected to achieve a full output recovery, but output in emerging economies remains below the pre-pandemic levels.

It is to accentuate with rising inflation, which hits low-income workers particularly hard—constraining monetary policy. The poor are the worst hit by food inflation. Globally and in advanced economies, inflation is running at the highest rates since 2008. In emerging markets and developing economies, it has reached its highest. Many emerging and developing economies are withdrawing policy support to contain inflation, well before the full recovery, says WB. The global inter-personal inequality has increased for this reason. The situation in India is apparently no different.

This calls for a policy review and rejection of hackneyed global bodies’ suggestions that are under the pressure of large economies. Such economies want developing economies such as India to subsist theirs. India has to take strong steps as per its policy of ‘swadeshi’ and ‘Make in India’ to stem inequality growth. 

India has to review its policy of awarding projects to foreign companies while opening the door for competition so that local corporations do not revert to the license-permit raj. But unless it takes steps to insulate the Indian economy from malignant global influences, it would continue to be in a situation of unwanted crisis.

It has to take steps to reduce inequality drastically. As per World Inequality Report, the richest 10 percent of the global population takes 52 percent of the global income and 76 percent of the global wealth, while the poorest 50 percent earns 8.5 percent of the income and owns 2 percent of the wealth.

Indian numbers are more intriguing. The top one percent earns 21.7 percent of the income, while the bottom 50 percent of the population earns a mere 13.1 percent of the income. Gender inequality adds to the divide.

The corporate constitute the largest segment of the richest. In other words, the world is dominated by the corporate is heaping tremendous woes on the people. Unfortunately enough the corporate has grown in power more than the sovereign States. They are dominating the global policy formulations. This is what affects the global situation. A strong message from India can change the global scenario.

India is at the brunt of witnessing social turbulence that is likely to decide the political outcome in the present Assembly elections to five States. The World Bank’s concern of turbulence in a more unequal world is an alert that India must listen to and take fast corrective steps to reduce inequality through better working conditions, wages and stability to the poor.

The growing unrest in the world has to be stemmed through drastic policy changes and thrust on welfarism, which is the message given by all religions. Let the world change as per the innate concept of vasudhaiva kutumbakam. A change in India can alter the global course. India has to take the lead to show the path to a fair, just, and dignified world. —INFA

Advertisements | 5E For Success