BBC NEWS | Business | India: Boom what boom?
The neo-liberal economic model was always intellectually vacuous, but now we know it is also dangerous and destabilising
BBC News is running a series of commentaries this week by economists on the challenges facing the global financial system. Today, Jayati Ghosh considers the implications for India.BBC NEWS | Business | India: Boom what boom?
Jayati GhoshJayati Ghosh is Professor of Economics at Jawaharlal Nehru UniversityThe financial crisis has drawn attention away from an important feature of the preceding boom: it created much more inequality, with the poor effectively subsidising the rich.
This was true internationally, as central banks of developing countries parked their growing foreign exchange reserves in the US, so that the South provided net finance to the North, instead of using such resources for its own development.
It was also true within countries, as profits soared but wage shares of national income declined sharply and agrarian distress persisted.
India is seen as a big success story of globalisation, but only a minority of Indians benefitted materially from the high growth.Formal sector employment stagnated, real wages for most workers actually fell, nearly 200,000 farmers committed suicide in the period of 1995-2006 alone, and there was an increase in the millions of hungry people and malnourished children.