CHENNAI: India’s economy is strong because of responsible families and responsible women, said noted columnist S Gurumurthy here on Monday.
Economics of the country could not be understood if the culture was not taken into consideration, he said disagreeing with economist Jagdish Bhagwati who had advised changing the fundamental instinct of Indian women to save. He was speaking at the annual lecture of Scientific Research Association for Economics and Finance (SRAEF) at PK High school.
Bhagwati had advocated halving family savings from 20 per cent and instead encourage them to become consumers, adding that there was something culturally wrong with the women here who wanted to save their money. However, an individualist economy like the US has not fared any better when compared to a family-oriented economy like ours, Gurumurthy said.
“In the US almost 65 per cent of the families are hooked to the stock market. If the stock market goes down, the country’s entire economy will go down with it,” he said. In comparison, none with family responsibilities would invest in it. The stock market, in fact, would never reflect Indian savings, he added.
These family-oriented economies are largely bank-driven. The public sector banks have to be motivated and treated like the financial army, he had told the Government, a view accepted but did not get reflected in the Finance Minister’s budget speech, he alleged.
Expressing his displeasure towards outgoing RBI governor Raghuram Rajan’s policies, he said, “I have regard for Raghhuram Rajan. He is a nice man. An honest man. An outstanding man. The only problem is that he’s an economist,” he quipped, calling the stressed asset policy in banking ‘anti-national’. Gurumurthy said he had made a presentation to the prime minister on job creation in formal and informal sectors between 1991 and 2013. During this period, the corporate sector had 520 billion dollars of foreign investment and the banks lent Rs.18 lakh crores in addition to this. But the sector merely added 1.27 million jobs in these two decades. It was the 58 million non-formal enterprises that generate about 128 million employment opportunities that worked for the country. “We survived only because of micro and small scale industries,” he said. But for them, the bank advances constitute only 4 per cent. It was based on this that the prime minister launched MUDRA scheme, which, he noted, the RBI had opposed.