anyone thinking of bridging the income gap in indian society would be at fault unless redesigning of the market is considered. in simple words, a market comprises of a producer, the trader and the consumer. while there was utmost need of a driving force, the trader, in putting the consumption cycle at work, an unchecked market mechanism has led to income disparity.
let us explain how. the producer that generates goods and employment is the primary player in any economy. the same employment generates consumers who buy different goods and thereby let the economy function. this production and purchase relationship is the key driving force in any economy, to be true, the only driving force.
traders in between do facilitate purchases, however also distort the market in many ways, for a trader isn’t a producer, although he may be a consumer for some produced goods.
now we need to observe how money is created in any economy. for the part of work one performs, he earns some value (today in monetary terms) and with this earned value he purchases a portion of the work performed by another player in the economy.
this work is generally performed by agriculturists (primary sector) and manufacturers, while they are complemented by the tertiary sector which provides them services ranging from accounting to banking and tourism to telecom.
the indian picture is however highly distorted owing to an unwanted predator, in this case a trader, who preys upon the profit of manufacturer and overcharges the consumer thereby reducing his ability to purchase more goods. the irony is that the economy still appears to be functioning well since this trader is also a consumer and thus a driver of primary and secondary sector, in actuality however he is only an enabler, nothing more.
indian market is flooded with traders, from grocery retailers to electronic goods retailers and the situation is aggravated by the mrp (maximum retail price) concept, which today has turned from maximum to mandatory retail price. the same does not allow market forces to decide the price of goods, rather it is imposed forcefully by the trading community upon the buyer in form of mrp.
the trader, charging superfluous commissions for a minuscule role they play in the economy, falls either in middle class or upper middle class bracket, while the lowest level is occupied by labourers and peasants who are genuine drivers of the economy. this unchecked presence and progress of traders is what that doesn’t and will not allow income disparity to go.
unless the market is redesigned to allow only justifiable profit-making for traders, the rich-poor divide in india and other developing countries is here to stay, for long, may be forever.
information technology can change this picture with ecommerce as a way to discover price of goods as determined by genuine market forces. the government needs to save the ailing and falling ecommerce market through targeted planning. once goods reach the consumer at justifiable price, it is sure that the trading community will never remain as formidable as it is today; and income disparity and the rich-poor divide wouldn’t survive for long in an atmosphere where genuine players of economy will interact directly with each other.