Recent speeches by PM Narendra Modi, Parliamentarian Tejaswi Surya etc., all contained points relating to need for privatization and to do away with the concept of Nehruvian Socialism. This clearly indicates that India is slowly and steadily starting to move in the direction of Capitalism.
What is Capitalism?
Capitalism refers to the economic system, where the Government buckles up and grabs a back seat role, and people or private organizations compete against one another in a free market world to put forth the best prices with respect to their goods and services.
Why Is Capitalism Important?
Equality – Irrespective of your social background, everyone gets the desired opportunity to compete and make it big. The basic underlying principle is the harder you work, the greater is your reward.
Freedom – Most of the people going this article would have passed through an above par education system where one had multiple subjects to study, then one would choose his/her favourite subject to specialize at the college level and then they would apply for a job one chooses from an array of options. This is an example of how classic capitalism works, one gets the freedom to do and choose what they want.
Innovation – People and Organizations spend a lot of time on research and development to develop a profitable product and to beat their respective competitors and this leads to innovation. Innovation with regards to news goods or services eventually helps the citizens.
Efficiency – Firms working in a capitalist ecosystem face incentives to be efficient and produce goods which are in demand. These incentives pressurizes them to cut costs and avoid waste. State-owned firms are often seen to be more inefficient (e.g. less willing to lay off the surplus workers and fewer incentives to try and adopt new innovative working practices.). Services provided by private sector banks vs Services provided by public sector banks is a fine example with respect to the point of ‘efficiency’.
All the above-mentioned reasons directly or indirectly contribute to making a country more wealthy.
Reliance Jio is a perfect example of the consequences of capitalism done right. Everyone remebers the price of data plans in the Pre-Jio era. For example, Airtel used to charge Rs. 251/- for 1 GB 3G data for 28 days. Reliance Jio entered the market with a storm by providing 1 GB 4G data for a single day at a rate of as low as Rs. 5/- only, approximately. Now, this forced the other market players to provide internet at similar rates to that of Reliance Jio to remain in the competition.
As a result, India is now the cheapest country when it comes to providing data with average cost is U.S. Dollars only coming to $0.26 or Rs. 19/-(approximately) in comparison to global average of Rs. 600/- [As per Forbes, 2019].
India is still a developing country, constituting elements of both socialism and capitalism. In the present situation where the youth population is on a rise expeditiously, it won’t be possible or feasible for the government to provide jobs for everyone, private sector is the source of majority of the jobs present currently and the ones to be created in the future, which is a result of a free market economy.
Against the common perception of Capitalism leading to poverty, it is in fact because of Capitalism that approximately 700 million people have moved out of deep poverty in the 21st Century. (Source: https://www.aei.org/economics/international-economics/700-million-humans-have-moved-out-of-deep-poverty-in-the-21st-century-thank-capitalism/)
To conclude we can say that Capitalism if practised within the legal realms can be a boon for any country, the examples being the countries like USA, South Korea, Australia etc.