Daily Current affairs
Wealth creation happens in an economy when the right policy choices are pursued. For instance, wealth creation and economic development in several advanced economies has been guided by Adam Smith’s philosophy of the invisible hand. Despite the dalliance with socialism – four decades is but an ephemeral period in a history of millennia – India has embraced the market model that represents our traditional legacy. However, scepticism about the benefits accruing from a market economy still persists. This is not an accident as our tryst with socialism for several decades’ makes most Indians believe that Indian economic thought conflicts with an economic model relying on the invisible hand of the market economy. However, this belief is far from the truth.
In fact, our traditional economic thinking has always emphasized enabling markets and eliminating obstacles to economic activity. As far as half-a-century back, Spengler (1971) wrote that Kautilya postulated the role of prices in an economy. Kautilya (p. 149) averred, “The root of wealth is economic activity and lack of it brings material distress. In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction. A king can achieve the desired objectives and abundance of riches by undertaking productive economic activity (1.19)”. Kautilya advocates economic freedom by asking the King to “remove all obstructions to economic activity” (Sihag, 2016).