Breaking the Backbone of India

The Informal sector is what keeps India moving. That part of the market keeps on working and so you get your daily milk, vegetables and newspapers delivered to your doorsteps.  According to ILO, close to 81% of the Indian jobs are in this informal sector. Informal sector is the backbone India’s economy.

Since coming to power the Narendra Modi government is busy breaking this very backbone informal sector of the Indian economy. First they hit this sector hard with the hammer of demonetization. That exercise alone shutdown many small and medium businesses and unemployed millions of workers. Then came another blow of GST (Goods and Service Tax). This ill conceived indirect tax system again destroyed, and continue to destroy, many businesses and jobs.

Not only this, many programs like the MNREGA or Pradhan Mantri Awas Yojana etc., are stealing workers from the productive sectors of the economy and diverting them to the unproductive sector e.g., in Surat city many textile workers left jobs and went back home because now government is paying them more to do the unproductive work of “digging ditches and filling them up again” under MGNREGA program in their native places. The same is happening under many such so-called “Welfare schemes”. Any new scheme that the government starts destroys jobs and wealth in the productive sector of the economy. Only someone without the basic understanding of economic science would call these programs “employment guarantee” or “Welfare” programs!

The more the Modi government panders to the poor people of India, to win their votes, and provide them freebies, the more that will corrupt habits of these previously hard working people. Once habituated to have everything for free, these people will demand more. No government in the world can fulfill all these endless demands. In the end this will destroy the economy and bankrupt the government also.

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