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Will the new economic measures take the Indian Economy in the Right Direction?


'A special focus has been given to up the savings rate in the economy. With a slew of tax incentives, the increased savings will channelize into higher investment rate and hence a better and robust GDP.'

INTRODUCTION:

India is presently known as one of the most important players in the global economic landscape. Its trade policies, government reforms and inherent strengths in the economy have attributed to its standing as one of the most sought after destinations for foreign investments in the world.

Also, technological and infrastructural developments which are being carried out throughout the country augur well for the trade and economic sector in the years to come.

Moreover, the 'Make in India' initiative undertaken by the Government of India is likely to bring about positive economic reforms into the country as well as encourage more domestic investments in the next few years. We must remember if India's economy is strong then the Indian Government has more space to manoeuvre its economic diplomacy to its advantage.

IMPORTANT MEASURES:

The boost in consumption will provide the fast-pace growth that will help make up for the slow speed of structural reforms like GST and demonetisation.

The boost in consumption will provide the fast-pace growth that will help make up for the slow speed of structural reforms like GST and demonetisation.

Thus, there is a necessity for the government to intervene, to increase the size of the formal economy. Some of the measures that can be taken are:

  1. Financial Inclusion - Access to formal credit, banking facilities and impart financial knowledge. The recent push for promoting digital cashless economy, Schemes such as Jan- Dhan Yojana, Bank Mitras, Lead Bank Scheme, and Priority Sector Lending are good steps by the government towards promoting formal economy.
  2. Land and Tax Reforms - The current laws encourage firms to remain small and does not provide them an incentive to grow. For example: Raising the number of workers in a firm requires government permission which is time consuming and complicated process.
  3. Increase connectivity - The high cost of urban living does not promote labour intensive firms, while poor connectivity reduces possibility of promoting hub and spoke model.
  4. Improve quality of human capital - Boosting education and skill levels will provide the necessary foundation for the formalisation of the economy. The SSA, Mid Day Meal Schemes, SWAYAM, Skill India Mission is some good initiatives by the government.
  5. Better access to markets and price discovery - It will set a precedent in the formalisation of the agriculture sector which provides the largest informal employment.

India's ongoing cyclical upturn getting a hand from structural tailwinds. The structural story will be supportive of long-term growth prospects, provided the demographic dividend is harnessed effectively and productivity continues to improve on timely reforms.

For long the Indian administration has separated the domains of strategic diplomacy and trade facilitation. However, the new government is actively working to bring the two under one umbrella knowing well that 'economic diplomacy' is crucial to regaining India's growth.

India has to improve its infrastructure so that it can attract more foreign bigger companies in India is presently known as one of the most important players in the global economic landscape. Its trade policies, government reforms and inherent strengths in the economy have attributed to its standing as one of the most sought after destinations for foreign investments in the world.

Also, technological and infrastructural developments which are being carried out throughout the country augur well for the trade and economic sector in the years to come.

Also, the 'Make in India' initiative undertaken by the Government of India is likely to bring about positive economic reforms into the country as well as encourage more domestic investments in the next few years. We must remember if India's economy is strong then the Indian Government has more space to manoeuvre its economic diplomacy to its advantage.

We see India's ongoing cyclical upturn getting a hand from structural tailwinds. The structural story will be supportive of long-term growth prospects, provided the demographic dividend is harnessed effectively and productivity continues to improve on timely reforms.

Over the last twenty-five years, as a result of the launch of the new economic policy and its continuation, the Indian economy has undergone significant improvement. Currently, India is one of the fastest growing economies in the world.

India will grow as the second largest economy by 2050. At present, the country is categorized as an Emerging Market Economy (EME) along with China, Brazil, and Russia etc. Even in the current phase of the global economy, India's macroeconomic performance is comparatively better.

- Laxmi Prasad