Notwithstanding the impressive growth rate recorded in the last few quarters, rising inequality is the biggest challenge that the Indian economy is facing at present. A clear indication of income inequality is evident from the fact that while spending on imported consumer durables have reached over 37 per cent of pre-pandemic levels, demands for domestically manufactured products have fallen to six per cent below pre-pandemic levels. The prevailing disparity is widening the rich-poor, urban-rural divide with every passing day as it is not at all helping domestic resource generation. If we ignore this worrying signal, the Indian economy will not be able to march ahead. As a matter of fact, since the inception of new economic policy in the early nineties, a debate over the priorities of the Indian economy has been continuing. The supporters of the new economic policy strongly advocate that a higher growth rate will ensure speedy economic development and the resultant trickling effect will benefit the poor. On the other hand, a group of experts are of the opinion that the Indian economy will never be strengthened until it focuses on developing rural India, as inclusive growth is a major pre-condition for bettering the economy. This is why disinvestment or increase in welfare spending by the government have always generated heated arguments among economists. Now, the time has come to find a concrete answer for this dilemma as the steps initiated now will have far reaching consequences in strengthening the Indian economy.
Most experts are satisfied with the present growth rate of the Indian economy as it is driven by a strong demand. But at the same time we should take note of two important factors. Firstly, despite registering growth during the past few quarters, it is anticipated that the economy will reach only pre-pandemic levels by the end of the present fiscal, which effectively means that there has been no growth since the last two years. Moreover, the demand which is driving the economy may not sustain for long. The present demand can best be described as a pent-up one. Lockdown restrictions have prevented people from addressing their needs for a long period of time. Now with the easing of restrictions, people are taking on pending jobs which have provided the much needed thrust to the economy. The challenge is to sustain the demand which will largely depend on the policies that will be adopted before the beginning of the next fiscal. The best possible way to tackle the crisis is to make investments in the domestic sector, so that the people living at the bottom of the pyramid are benefitted. Majority of them have lost their livelihood during the pandemic and the fear of Omicron has made it more difficult for them to find any suitable alternatives. Thus to ensure a robust economic growth, the key is to provide income to this huge workforce, who are now jobless. Their participation will definitely be a positive boost to the Indian economy.