TRICKLE DOWN ECONOMICS

• The concept of “trickle-down growth” rests on the belief that rapid economic expansion naturally benefits every section of society, including the poorest and most marginalized.
• According to this theory, promoting business investment through measures such as tax concessions, deregulation, and subsidies is expected to stimulate overall economic activity.
• Over time, this growth is assumed to translate into higher production, job creation, and greater consumer spending, ultimately improving living standards for all.
• Supporters of trickle-down economics argue that increased investment in industries leads to the establishment of more enterprises and factories, which in turn creates employment opportunities. They also claim that rising growth rates are generally linked to a reduction in poverty levels.
• However, from the 1970s onward, evidence from several developing countries revealed a different reality. Despite periods of impressive economic growth, vast sections of the population continued to live in extreme poverty.
• This experience highlighted the limitations of relying solely on growth-driven strategies and emphasized the need for inclusive development policies—those that focus on generating employment, ensuring fair distribution of wealth, and addressing poverty directly rather than assuming prosperity will automatically “trickle down.”

In recent years, India’s economic strategy has reflected elements of the trickle-down approach, with policies that tend to emphasize corporate incentives rather than direct welfare measures. This shift is visible in the decline of budgetary allocations to several social support programmes such as:

— Nutritional assistance initiatives,
— The school mid-day meal scheme,
— The Price Stabilization Fund,
— LPG Direct Benefit Transfer (DBT),
— Skill development and vocational training programmes,
— The Pradhan Mantri Awas Yojana (PMAY), and
— Agricultural support schemes, including interest subsidies on short-term credit, fertilizer subsidies, and food grain procurement.

4. Natural resources

• Another dimension of trickle-down growth policies is the phenomenon of land grabbing. The term refers to the large-scale acquisition or appropriation of natural resources—such as land and forests—through both formal ownership and informal control mechanisms.
• In the Indian context, such practices are frequently associated with displacement and loss of land rights, particularly among vulnerable communities.
• Historically, India’s Nehruvian development model, which emphasized modernization, large infrastructure, and institutional reforms, inadvertently triggered widespread development-induced displacement, most notably in tribal regions.
• Since independence, the Indian state has implemented a range of development-oriented projects—covering irrigation, power generation, industry, mining, and even forest and wildlife conservation.
• While these initiatives aimed at national progress, they often resulted in the displacement of indigenous populations from resource-rich areas, deepening social and economic inequalities

5. Case Study of Jarkhand

• The situation in Jharkhand offers a clear example of the challenges associated with resource-driven growth. Nearly 26% of the state’s population comprises tribal communities, and the region is endowed with abundant mineral wealth, including coal, bauxite, iron ore, copper, gold, limestone, and graphite.
• Out of Jharkhand’s 24 districts, coal mining operates in 12, with over 75,000 hectares of land already acquired for this purpose. Several of these coal blocks have been allocated to private companies, and mining activities for bauxite and iron ore are equally extensive.
• However, such large-scale extraction projects have been accompanied by massive displacement of local and indigenous populations.
• Compensation for those displaced is primarily monetary, determined according to the market value of land at the time when acquisition is first notified, not when it is actually taken over.
• This approach fails to reflect the true value of the loss, as it overlooks non-economic aspects such as cultural identity, access to natural resources, forests, and traditional livelihoods.
• Beyond inadequate compensation, displacement brings a host of social and economic consequences — homelessness, unemployment, food insecurity, loss of common property resources, social fragmentation, and deteriorating health conditions.
• Ironically, the industrial projects and factories that emerge on these acquired lands seldom provide jobs to the displaced communities themselves, further marginalizing those who have already borne the cost of development

• The Special Economic Zones (SEZ) Act of 2005, enacted by the central government, exemplifies another dimension of India’s growth-oriented development model. SEZs were envisioned as self-contained economic hubs offering minimal taxation, tariff exemptions, and regulatory relaxations to encourage exports, attract foreign direct investment (FDI), create employment opportunities, and enhance infrastructure development.
• Both domestic and international corporations have made significant investments in these zones. In return, the State has allocated large tracts of land and mineral resources, facilitating the establishment of industrial units, residential complexes, shopping centers, hotels, and even golf courses.
• However, this model of development has also resulted in widespread displacement and dispossession of local communities who formerly inhabited or depended on these lands.
• The Land Acquisition Act of 1894 played a crucial role in this process, empowering the government to acquire private land for ‘public purposes,’ often without adequately addressing the concerns or objections of affected individuals.
• To mitigate such issues, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013 was introduced, aiming to ensure fairer compensation and improved rehabilitation measures.
• Yet, despite its progressive framework, the Act’s effectiveness has been undermined by several challenges—weak implementation, insufficient livelihood restoration, incomplete land records, dilution through state-level amendments, and the continued exclusion of tribal communities and women’s rights.
• Additionally, the absence of a comprehensive land-use planning policy has further limited its impact on achieving equitable and sustainable development

• India’s rehabilitation framework has often been criticised for failing to adequately protect those who have already experienced displacement. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 includes provisions stating that individuals previously displaced should not face eviction again, or if they do, must receive double compensation.
• However, available data on displacement and resettlement reveal that such safeguards are rarely implemented in practice.
• As a result, many displaced individuals—particularly from indigenous communities—are compelled to migrate to other regions in search of livelihood opportunities.
• Consequently, both displacement and rehabilitation have become central yet contentious elements of India’s broader development discourse, heavily influenced by the trickle-down model of growth.
• The forced relocation of tribal and indigenous groups for infrastructure and industrial projects often fails to deliver tangible benefits to those directly affected. Empirical studies have consistently shown that the promised gains of development seldom reach these communities.
• The Scheduled Tribes (STs), who form a significant portion of the rural poor and agricultural labour force, remain among the most vulnerable sections of Indian society.
• Indicators related to health, education, and livelihood continue to reflect deep socio-economic disparities.
• Although the government has launched multiple welfare schemes and development initiatives aimed at improving living standards in tribal areas, several scholars—including Virginius Xaxa—have argued that these policies often remain detached from the social and cultural realities of the communities they intend to serve.
• The lack of institutional support, participatory mechanisms, and local involvement has rendered many such interventions ineffective. As a result, the challenges of displacement and inadequate rehabilitation persist, aggravating existing inequalities.
• Poorly implemented welfare measures, combined with limited access to resources and representation, continue to intensify the hardships faced by India’s marginalized and indigenous populations