Our government told us that the economic slowdown in India was due to the economic slowdown worldwide But the IMF (the International Monetary Fund) has said that 80% of the reason for the world economic slowdown is the economic slowdown happening in India So this proves that the pathetic condition of the economy and unemployment in our country today is due the internal reasons of our country It is due to the mistakes of our government It is due to the failures of the Modi government.
The IMF has also stated that India’s projected growth rate for the year 2019 has been lowered down to a mere 4.8% Do you know what this means? The dream which our Prime Minister showed us of a 5 trillion dollar economy the one we were supposed to achieve by 2024 With this growth rate, India will not be able to reach that 5 trillion dollar economy goal even by 2030 So the biggest question that arises here is how an Indian economy be revived? How can we achieve economic growth again?
How to Revive the Indian Economy?
What we will do an analysis on and I will show you what are the suggestions of the country’s top economists to revive the Indian economy Come let us see Let us begin with economist Abhijeet Banerjee who was recently awarded a Nobel Prize in the field of economics He believes that the biggest problem in the economic crisis today is that of demand in the economy.
Main Problem in Economy Is Demand
Demand has fallen drastically That is, a common man in the country does not have money to buy anything So the demand for everything in the market has fallen In his opinion, the solution for this is to give money in the hands of the common and poor man This can be done by increasing the minimum support price of the crops.
This can be done by the National Rural Employment Guarantee Scheme There should be a direct transfer of cash in the hands of the poor people In his opinion, the government should focus on demand and leave aside worries of fiscal deficit and inflation rate You might already know the meaning of inflation rate- the inflation that is happening Fiscal deficit means how much money the government is earning and how much money it is spending The ratio of it is called the fiscal deficit whatever debt is incurred by the government.
Abhijeet Banerjee also believes that the biggest priority of the government should be a focus on human development that is spending more in the fields of education and healthcare in order to develop our labor force He says that the Indian labor force in comparison with that of China, Bangladesh, and Vietnam is ranked quite below and is of much lower quality and the reason behind this is that we do not focus as much on education and health care due to which the labor quality is quite substandard in our country
Next, we will see the suggestions of the economist Ajay Chibber He is a visiting scholar in the George Washington University He has obtained his Ph.D. from Stanford University In his opinion, the ongoing trade wars between USA and China This was a huge opportunity for the rest of the countries of the world to improve their economic growth Because a lot of companies of the USA manufacture in China, the goods are made in China So China basically exports manufacturing Due to the trade wars, these companies had to look for another country for manufacturing (their goods) so the other countries could take up this job and take advantage of it
But India lost this opportunity due to lack of competitiveness and the rest of the countries like Bangladesh and Vietnam took advantage of this opportunity and invited the other companies and got them to invest in their country to shift the manufacturing There was a jump of 30% in the US exports of Vietnam after the trade wars began And Bangladesh too, took great advantage of this opportunity due to which the economic growth of Bangladesh is at 8%
Recovery in Investments is Key to Recovery in Economy
According to Ajay Ji, if we have to recover the Indian economy, we need to recover the investments In his opinion, we need to liberalize the agricultural markets and exports According to him, in order to boost rural demand, we would need to spend more money on PM Kisan and MNREGA He says that there is a need for a huge push in the tourism sector A scheme like “Swaagat India” could be launched which could double the tourists coming to India in the next ten years He is in favor of privatization.
In his opinion, Air India, Bharat Petroleum, Shipping Corporation of India and the Cement Corporation of India should be privatized and disinvestment should be done For the rest, he says that the government should focus on 8-10 industries and should give priority support to those industries, For example, the auto industry and the pharma industry
Problem is Centralized Working of Govt.
Out of all the suggestions of all the economists that I have analyzed, the most detailed and the most specific suggestions have been given by our former RBI Governor, Raghuram Rajan In his opinion, the biggest problem of the government is its centralized approach For every decision, the PMO needs to be approached All the decisions stem from there and nobody else has the authority to take a huge decision due to which the government is highly inefficient The PMO is approached on all matters His first suggestion is that the government should quit looking for political motives in everything
If any economist criticizes the government or gives them a suggestion, then the government shouldn’t try and (cast aspersions on him by saying) he must be paid by Congress He is doing this because he must have some ulterior motive The government should learn to accept suggestions Decentralization is a very critical thing that the government should do It should empower its ministers to take their own ministers and it should appoint competent ministers Secondly, he says that the government should clearly know what it wants regarding GST There shouldn’t be attempts to change the rates of GST every few months Because if we want to attract investments to our country then, for that, the tax and regulatory policies need to remain consistent
If changes are made every few months, then this causes inconveniences for the businessmen and it becomes very unpredictable (to understand) for what items the GST rates would be increased or decreased in the future We do not know hence we will not invest in this country Next he says that the government should focus on the telecom sector and maintain its competitiveness in it It should not so happen that the telecom sector is reduced into a monopoly or duopoly where only one company rules, for example, reliance Jio or there are only two companies that are the only options for the consumers either Reliance Jio or Airtel The government should focus on maintaining competition so that other companies can also thrive and the other options remain available to the consumers Because if competition is consistent in this sector then that would ensure consistent growth In his opinion, the process of land acquisition should be made easier and more transparent so that the other companies get motivated to invest Labor reforms is another important suggestion of his He maintains that there should be flexibility in labor contracts
Today, what happens is that most of the industrial companies hiring people have two options: one of them is making the workers permanent after one year or the workers get hired on a short term contractual basis Short term contracts are the ones in which people get hired and are later fired Since most of the companies prefer to have a short term contract with the workers, what this leads to is the companies not investing a lot make their workers skilled to augment their skills and improve them because the companies know that this is a short term contract and then they (the workers) would get fired
The other effect of this is that the workers themselves do not get the safety of job security In his opinion, the government should bring in an intermediate contract in which the workers need not be made permanent but more rights are given to the workers so that they need not be hired on a short term contract basis By doing this, the Indian labor force would be more flexible the workers would get more training and their skill development will be enhanced Furthermore, just like Abhijeet Banerjee, Raghuram Rajan says that the government needs to focus on sectors like education and health care There is a need to increase government regulations (in fields like) environment, quality of education food and healthcare.