20/3/2014 WHAT AILS THE INDIAN ECONOMY - Mindworkzz

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The charm of the Indian economy lies in its model of high growth rate and equitable distribution. A healthy
economy is, thus, essential for India reaching a higher level of equitable development and equality. As opposed
to the common perception, the growth of the Indian economy is as important for the industrialists, big
businesses andprofessionals as it is for daily wage workers, farmers, unskilled labourers and small businesses.

The commonly used indicators for this economy are GDP (Gross Domestic Product) growth rate, current
account deficit (CAD)and inflation. The GDP growth rate, for the past decade, has promised us great benefits. It
was sailingat a rate of 8-9% but is now expected tostay in the region of 5%. The current account deficit is
approximately 5% of the GDP, while the inflation rate is equally troubling figuresfor the economy. The falling
rupee and the uneasiness of the markets are only adding to fears and slowing our growth.


Indian economy, because of its history and evolution, faces four fundamental constraints to its growth. These
basic limitations need long-term attention before they act as a positive stimulus for the country. These are the
Indian population, inevitable dependence on foreign economies,expenditure on defence and the social stigma
prevalent in India.

The size of the Indian population, which has been growing at a rate higher than one that is sustainable, causes
the greatest limitation to the economy. It means that every resource in the country needs to be shared among
more people, which will put a further strain on the economy. But the bigger problem is that a huge chunk of the
population is not contributing anything to the economy.

Since the reforms in the 1990s India has been a major participant in the globalization process that has
causedthe Indian society to become dependent on global markets. It is hard to equate the gains and losses
from globalization, but whether India likes it or not, it will continue to remain a part of this process. So the Indian
economy, in future, will be affected by the events of the world. This decreases the ability of the Indian policy
makers to make autonomous decisions to stimulate the Indian growth.

Post independence, the circumstances have been such that, we have been forced to spend tremendous
amounts on defence. This year, the budget estimates the expenditure to be 12.23% of the total central
government expenditure. This value has almost halved since the 1970s but is still a considerable amount.
Instead,if this money is spent on education, health and poverty, it will have a greater return to the economy
because individuals will be empowered to contribute more.

The last fundamental limitation is the social stigma prevalent in the Indian society. If certain sections of society,
like women, are discouraged to participate in productive activities then the country will not function at its full
strength.


These four limitations cant be overcome by one reform or a slight adjustment in the policy. They require
repeated discussions followed by appropriate action. Sadly, these arent the only factors hampering our
economy.It is also affected by issues, which can be cured in the short-term with adequate reforms and
policies.These are a weak political system, decreasing importance to agriculture and the poor quality of Indian
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WHAT AILS THE INDIAN ECONOMY
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20/3/2014 WHAT AILS THE INDIAN ECONOMY - Mindworkzz
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institutions.

The political system needs to understand the economy thoroughly before passing bills. Political parties are
often blamed for making policies that only secure votes. The Food Security bill, which finally got passed by the
Lok Sabha, is being interpreted as exactly that. The concept of coalition government, though it has certain
positives, has resulted in reforms being implemented late or not being implemented at all. This is because every
party in the coalition government needs to be satisfied in order to stay in power.

Indias climate and geography has huge potential for agriculture growth, but this sector contributes the least
among the primary, secondary and tertiary sectors. The importance of agriculture was realized in the first five-
year plan but it hasn't been reciprocated in our actions recently. While the secondary and tertiary sector will
continue to grow, they will not accelerate at the tremendous rate we saw earlier. Last week, when the finance
minister gave his revival plan for the economic slowdown, his 10-pointaction plan, didn't give the required
attention to theagriculture sector.

The Indian institutions suffer from various quality issues. Both government and private institutions are backbone
of the economy. While general economic reforms can improve their functioning marginally, reforms in their basic
structure are needed to ensure they are stable organizations in future. The public sector undertakings and
government ministries are a perfect example of this. They are not working at the optimum potential due to
bureaucratic inefficiencies. Corruption is a substantial part of this. It cheats the government of massive sums of
money every year. A revamp is required to overcome these structural drawbacks.

As our currency is set to touch the 70 rupees a dollar mark, we are entering an economic crisis, which is being
compared to that of 1991. The reason for this crisis is that India has taken up a massive challenge to ensure
welfare to one-sixth of the worlds population. But, with our prime minister, who happens to be an economist, we
would like to believe we are in safe hands.
Posted by Kewal Kharkwal 31 August 2013 11:37:00 Categories: GD Topics
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1 comment 15 days ago
Bhautik kawa Hi Neha great information
you share with us. Can i take few point for
my project report?
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2 comments 4 months ago
Mitesh Agrawal Thank u Mam..... for
sharing a invaluable piece of information.
I'm sure it will bring wonderful change
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1 comment 7 months ago
Sanjeet Walia Much needed article.....
but sir many a times lack of consistency
bogs me down. Could please show a
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throughout the year 2013-Part 1
2 comments 3 months ago
Ashis Kithania Nice work.. Can u plz write
an article on world geography.. its very
diififcult to compile that data
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