INTRODUCTION

This chapter deals with the relative deterioration in the economic performance of the Indian community in the post-1970 period and the priorities for remedial action. The year 1970 marked the launch of the Malaysian government's New Economic Policy (NEP) with the goal of reducing interracial economic imbalances in employment and equity as well as eradicating poverty. On equity, the explicit target has been to raise bumiputra ownership to 30 per cent from its initial level of around 2 per cent. These objectives are being achieved by according bumiputras a preferential treatment in education, employment as well as share placement.

The chapter is divided into five parts. Part I is an introduction. As a backdrop it also gives an overview of the strong relationship between human capital and economic development as well as of its relevance to the issues discussed in the chapter. Part II examines the trend in the economic position of the Indian community over a thirty-five-year period from 1970 to 2005 and the key determinants of its under-performance. Part III deals with certain key issues and challenges facing the Indian community and the nation. Part IV makes an assessment of the priorities for remedial actions if the deterioration in Indian economic performance is to be arrested and reversed. A conclusion is presented in the final part of the chapter.

The limited availability of data and studies has restricted the scope and coverage of the chapter. The breadth and depth of work on the economics of inequality including the economics of race in the United States is amazing. In Malaysia where the affirmative action programme on behalf of the bumiputra community is a key prong of government policy, much less studies or analysis have been undertaken on the subject. The lack of transparency in disclosure of data is very glaring and has been justified on grounds of sensitivity of the subject.

The basic premise of the chapter is that a country's economic development requires supportive institutions as well as human capital, that is, a well-trained, educated, hard-working and conscientious labour force.