Essay on Indian Economy

“At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom.”

These famous words were spoken by Pt Jawaharlal Nehru on the eve of India’s Independence. India, the land of all riches and abundance, once known as ‘Sone ki Chidiya’ was plundered to poverty under the ‘British Raj’. Famines and epidemics were common. However, after Independence, India made progress by leaps and bounds. Today, as we stand after completing 67 years as an Independent nation and 64 years as a sovereign Republic, India can proudly assert that it has come a long way in the development scenario. Since 1991, Indian economy has practised liberalisation, openness in trade and investment in infrastructure. However, many black areas still remain to be addressed. These certainly are great obstacles to the prosperity of our nation.

In general, every economy faces few common problems. First is the problem of allocation of resources, which raises the question of which needs should be fulfilled and which limitations are not much important to be fulfilled. More production of a particular good directs raw materials meant for the production of some other goods into the former’s production process.

Second problem is that of the efficiency of utilisation. Since resources are scarce, their production, distribution and utilisation must be as efficient as possible. Third problem is that of productive capacity. The economy would be able to grow only if its productive capacity increases.

Corruption not only maligns the image of a country but is also detrimental to its own citizens. You would often have heard the words:

“He is that official’s nephew, so he secured this job.”

Relation politics mars the opportunities deserved by many worthy individuals. Inefficient bureaucracy and ‘babudom’ suffocate the working processes of an otherwise smooth system.

The rapidly escalating per capita income, property and food costs have stalled even the basic tasks of everyday routine. Inflation is currently running at 8 to 10% and has been high even during economic decline. This indicated that inflation is not actually due to excess demand, but due to cost pushing factors like impediments in the supply chain of agricultural commodities. This hits especially the poor adversely, who are the most vulnerable to price rise.

One of the reasons behind inflation is the hoarding of essential commodities and then selling them at sky high prices when demand surges. This is known as ‘black-marketing.’ The boom in real estate sector has increased lending. The rise in the prices would cause RBI to increase interest rates. Thus, those in debts, would face difficulty in paying back loans.

India’s budget deficits are burgeoning, amounting to almost 8% of GDP, excluding subsidies. This restricts investment in public services like education and health. India has large reserves of foreign currency, but there has been running a current account deficit. Also, imports are growing faster than exports. The wide chasm caused a giant fall in the value of rupee between 2012 and 2014.

The disparity between rich and poor sections is increasing by the day. Economic growth has failed to benefit the poor. Recently, callous remarks were made about the poverty index. The ‘below poverty line’ definition still stands debated. Many poor still live with less than $1 per day. The 2013-14 period has seen a slowdown in economic growth. Unemployment rates have to be brought down. India is behind China, which has comparatively a better developing economy.

Poor quality and limited outreach of education is another hurdle. We can’t underestimate the role of education in raising the living standards of the population. Over 50% of Indian women are still illiterate.

Till today, many rural Indians lack basic amenities, like sanitation and water. Due to inadequacy of transportation, over 40% of farm produce degrades before reaching markets. Labour laws are rigid and politically exploited. Certain laws don’t encourage foreign investment. Agriculture sector needs a boost due to very low productivity, inspite of 60% of population engaged in this.

A few amends would bring the Indian economy back on track. To reduce fiscal deficit, direct transfer of subsidies should be mediated across India. Subsidies for diesel and urea should be scrapped. The retail sector should be opened to FDI. This would lessen the pangs of inflation.

Overseas bonds are an option to strengthen the rupee. To resolve the power sector crisis, the state electricity boards must be reorganised.

The oath of putting the nation on the path of development rests not merely upon the government, but also on citizens, who should be socially and morally responsible. The goal of economic security and sustainability is challenging. But can be achieved once a balance is established among the various dynamic sectors of economy. As Vivekananda said:

“Arise, awake and stop not till the goal is reached.”

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