|Demand of the question
Introduction. Contextual introduction.
Body. Why India require is to make their policies people-centric?
Conclusion. Way forward.
Indian economy is facing slowdown in recent times. There are various reasons for this slowdown. Although government has mentioned various tax benefits and tried to focus on boosting growth, it would not help much. The issues related to employment, Job creation, land, labour, agricultural marketing are being ignored that need urgent attention. Various steps like tax concessions being taken in hope to boost economic growth that may not help in long turn.
Why India require is to make their policies people-centric?
- Unemployment: Unemployment is all time high and has impacted the buying ability of individuals. Usher of new technologies, bad policies and inability of manufacturing sector to boost up the growth has impacted the overall growth of the country.
- Crisis in agriculture: There is a crisis in agriculture that runs deep. GDP per capita in the agricultural sector has been less than one-tenth GDP per capita in the non-agricultural sector for 25 years. Growth in output is monsoon-dependent. Employment creation is negligible. The outcome is rural distress.
- De-Industrialisation: The share of manufacturing in GDP and employment is lower than it was 25 years ago. India’s share in industrial production and manufactured exports in the world economy has declined steadily. The beginnings of de-industrialisation are discernible.
- Consumption: Private consumption contributes nearly 55-60% to India’s GDP has been slowing down. While the reduced income growth of households has reduced urban consumption, drought/ near-drought conditions in three of the past five years coupled with the collapse of food prices has taken a heavy toll on rural consumption.
- Investment: The household sector, which is the biggest contributor to the total capital expenditure in the economy, has lost steam since demonetisation. Thus people are not spending and investment from the private sector has reduced. Gross Fixed Capital Formation (GFCF), a tool to measure investment in the economy has declined from 34.3% in 2011 to 28.8% in 2018.
- Grass root actions: Slowdown is mainly due to fundamental deficiencies and thus need grass root actions. Issues such as labour reform with a strong political effort is necessary.
- Public expenditure: There is a need to increase public expenditure for investing in agriculture, infrastructure, marketing and storage and training and in providing profitable prices to farmers.
- Raise funds: Government should also raise funds for the Mahatma Gandhi National Rural Employment Guarantee Act to push up demand.
- Investment in SHE (Skill, Education and Health): Increasing additional jobs for ensuring basic health and good quality education up to the secondary level to all so that any meaningful skill formation is possible should be another aim. Government should raise public employment by filling all vacant sanctioned posts in the Central and State Governments, which would be around 2.5 million jobs. The human capital formation will give a big push to start-ups and MSMEs.
- Labour intensive sector: The government should also focus on promoting labour-intensive sectors such as gems and jewellery, textiles and garments and leather goods.
Government steps to boost economy are important but not sufficient. There is need to emphasise Increasing Demand by investing in people.The Indian economy has huge potential, the current slowdown must be dealt with a bottom-up strategy, which may include boosting agriculture, food processing, tourism, MSME, automobiles and pharmaceuticals.