Economic Survey 2020 explains why the rich are good for economy
BusinessToday.In January 31, 2020
Economic Survey 2020, tabled in Parliament today, says wealth creation can be good for economy and can only happen when right policy choices are pursued. Explaining how the government came at this conclusion, the Survey says the Centre collated data of the companies created by top 100 wealthy entrepreneurs in the country as estimated by Forbes in March 2019.
After excluding those with "tainted wealth" by applying several filters, the increase in entrepreneurs' wealth over a decade (31-March-2009 to 31-March-2019) was correlated with the benefits that translated to other stakeholders, including employees, suppliers, government, etc.
The result showed that wealth created by entrepreneurs correlate strongly with wealth created by their employees. Similarly, wealth created after procurement of raw materials also correlated with benefits reaped by suppliers. The similar results showed for capital expenditures and revenues earned in foreign exchange, among other segments.
This "shows that the wealth created by an entrepreneur helps the country's common citizens," the Survey opines, adding that tax revenues enable the government to spend on public goods and welfare schemes, which ultimately benefit citizens.
Greater wealth creation in a market economy enhances welfare for all. For instance, post-liberalisation, the Sensex reached the 5,000 marks for the first time in 1999 from its base of 100 points in 1978. "It was less than 1,000 points in early 1991 when India moved to a market economy from a command economy. Since then, the market capitalisation based index has seen unprecedented growth," it added.
The Survey says India's policy has changed from favouring "specific private interests" to promoting entrepreneurs that unleash the power of competitive markets. "India's aspiration to become a $5 trillion economy depends critically on promoting "pro-business" policy that unleashes the power of competitive markets to generate wealth," it adds.
Edited by Manoj Sharma