Prof.A N Sadhu
The subjects of Economics and Management have come a long way over time and have received greater importance in the emerging world economic order. The importance of the subject of economics, of which the management is an off shoot, arises from the fact that it is engaged in evolving the new techniques in the art of optimising the returns from limited resources available to the mankind. There have always been the issues which needed to be addressed as the world societies marched towards more organised forms of living. The history of economic thought brings forth the fundamental issues; economics remained faced with from the primitive stages itself. From subsistence economy, primarily based on physiocratic ideas, it was a big step forward to adopt mercantilism as a facilitating mechanism of widening the scope of economic activities. A more organised economic thought was developed by the classical economists led by Adam Smith, rightly known as father of economics. In fact the issues of globalisation relating to trade and commerce emerged from there itself. The proponents of classical economic thought had their own understanding of economic development explained through the doctrine of laissez faire. Along the time path, passing through the stages of neo-classical economic thought and modern economic thinking, the subject assumed the form of an important discipline of learning dealing with the complex problems of economic development. With a strong intervention of socialist thought developed by Marx and Engels, the doctrines of economics got more hotly debated and issues arising out of this ideological dualism dominated the world till in 1980’s, classical economic thought assumed pre-imminence owing to the collapse of soviet union, rejuvenating the capitalist model of economic development and bringing fresh focus on issues related to the working of the laissez faire model as an undisputed approach to the growth of world economies. With the rebirth of Adam Smith in the developing countries of the world, a new economic order took shape and raised new issues which started engaging the attention of the world economists. In our own country, the New Economic Policy was adopted from early 1990’s and soon we joined the list of emerging economies seeking to catch fast with the advanced countries of the world. The formation of BRICS was a formal recognition of the developing economies of Brazil, Russia, India, China and South Africa emerging as economic giants in the new World order. The emergence of these fast developing economies raised new issues which we are faced with, at the moment. The ideological issues have given way to the issues of integrating the world economies, passing through different stages of economic development, into a global economic order to overcome the problems of poverty, unemployment and inequality. The replacement of GATT by WTO, promoted a more economic interplay among the nations resulting into the issues of trade v/s aid and its allied concerns being debated more hotly than ever before. The emerging economic issues, as of today, are
* Globalisation
* Inclusive sustainable development
* Development and environmental change
* Productive employment opportunities for youth
* Balanced regional development
* Monetary and fiscal management and
* Level playing field in the new world economic order.
Globalisation is much talked about arrangement on economic integration for the last several decades. It is, however, a complex phenomenon. When we talk of economics, globalisation has always been with us. The very foundation of laissez faire doctrine is based on globalisation. Adam Smith advocated that more trade among nations will promote more production which in turn will generate more employment and dispersal of incomes resulting into higher purchasing power to sustain the spiral economic growth. The scope of globalisation has, however, broadened. The fast changing information and communication technology has made the world smaller than what it looks. Anything happening anywhere in the world results into its impact being felt all across the globe. The world being more closely connected, the economic fluctuations are felt across the globe in response to any such thing happening, in any one of the countries, more particularly, a developed one like the United States of America. Globalisation has also transgressed its limits and aspects, not strictly categorised as economic, also come under its impact through the multinationals which have struck their roots deeper into the socio-economic systems of the developing countries. Issues related to trade balances, import- export costs, customs duties, time of clearance and credit management have become very important and more complex in today’s globalisation. Globalisation, very seriously, impacts the local policies with respect to fiscal and monetary management, agricultural and industrial policy, social and physical infrastructure policies as also the levels of competence to catch up with the rapidly changing science and technology. These issues have been thoroughly debated and this debate shall continue as the world has become more competitive than ever before.
The global economic scenario has also undergone a change because of the rise of two major economies of the world viz. India and china as also other fast growing BRICS economies. “When America sneezes, the rest of the world catches cold” is no longer true because of America’s diminishing share in world output and resources. This has become more perceptible after 2008, when America witnessed one of the worst financial crises.The emerging issues now relate to maintaining the economic tempo in the country so as to rub shoulders with china in the international market with matching performance and robust growth. The issue of giving market access to multinational corporations has to dealt in a manner as would enhance our share in the world trade and generate scope for exporting our professional services to the advanced countries, in particular and to rest of the world , in general.
Sustainable development is also much talked about. The issue of ensuring that gains of growth should evenly percolate down to all sections of society has assumed greater importance because of the fact that even after six decades of economic planning in the country, around one-third of our people are gripped in poverty. The trickle down mechanism did not work because of wrong or half-hearted policy initiatives during the first four decades of economic planning. We have also a very large middle class with some islands of affluence. Unless all sections of population are taken on board, the development will remain lopsided and the glamour of few affluent pockets will also fade away. It is, therefore, necessary to work for inclusive sustainable development and orient our efforts towards achieving that goal, at the earliest. Over emphasising urban industrial development as a means of faster growth without blending these initiatives with the transformation of rural economy is fraught with dangerous consequences which have to be borne in mind. Already the talk of two Indias is there which the country can ill afford. With the slackening of economic growth in the last few years, the economic scenario of the country has worsened resulting into inflation, high fiscal deficit and rise in unemployment. This directly adversely impacts the process of promoting inclusive growth in the country. Unless there is massive investment in the rural economy, the socio-economic transformation of rural poor will not be achievable, in the manner, it is contemplated. It will need bold initiatives to engage men and material resources available in the country side in the processes of change efficiently and effectively.
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