With the Comptroller and Auditor General of India recently releasing an unflattering draft report on the National Rural Employment Guarantee Act (NREGA), the ideas of inclusion, employment and equality illustrated by leading world economists seem to gain more relevance in the Indian context. “NREGA to me seems like a policy of desperation. The government needs to come out with better policy initiatives like those which help in inducing greater professionalism in agriculture and in drawing people into full time employment” said Edmund Phelps, Nobel Prize winning economist. Speaking at the Bharat Ram Memorial Seminar on ‘Development with Justice’ today, Phelps elaborated upon his idea of the complex issues of development and social inclusion. According to Phelps, lack of development in countries is a result of underdevelopment of cultural and other institutions as well as weak regulatory bodies. Further, corruption, technological and knowledge backwardness also contribute towards underdevelopment. The Nobel Laureate believes that in order to develop, it is imperative for a country to acquire dynamism. “Sustainable development can be obtained only with creativity and dynamism in the market place,” he said. Talking about inclusion, Phelps said it is important to provide jobs to the people since inclusiveness goes beyond just income equality. “While the pecuniary benefits of a job include its wages and hence the ability to acquire and enjoy various goods available in the market, the non- pecuniary benefits include satisfaction and creative application of one’s mind,” he added, while emphasising the need for collective intervention by the state to address the issue of inclusion. Meanwhile, when asked about the controversial issue of subsidies, Phelps said that according to subsidy policy followed in some European economies, states give a subsidy to the firm/employer for every low wage person employed by it. “This ensures that along with productivity, the low wage employee also brings subsidy to the employer. Even in India, the government either needs to provide subsidy to the employer or to the employee, so that he can afford to work for a low wage,” he added. Delivering the inaugural address, Mani Shankar Aiyer, Union minister for panchayati raj, youth affairs and sports & development of north eastern region, helped in putting Phelps’ views in perspective with respect to the Indian context. “Despite a near double-digit growth rate, India’s ranking in the Human Development Index fell from 126 to 128. Thus, the question of development with social justice becomes insistent,” he said.High profile• McVickar Professor of Political Economy, Columbia University since 1982 • Earth Institute’s Center on Capitalism and Society Director since 2001•Best known for introducing expectations-based microeconomics into the theory of employment determination and price-wage dynamics in the late 1960s•Won Nobel Prize in Economics in 2001 for his analysis of intertemporal tradeoffs in macroeconomic policy
