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General Awareness

April 04, 2017 @ 01:15 PM

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April 04, 2017 @ 01:15 PM

Reasons and solutions for ailing Indian Economy

MBA Aspirants are expected to understand the critical assessment of economy. Following general awareness article will help you in WAT/Essay/GD and PI also. 
 
Read: Reasons and solutions for ailing Indian Economy
 
It is a fact that the Indian economy has not been performing well; however, what scares the people of India and also the investors is that the economy may not be able to pick up in the coming months.
 
 According to a survey, excessive bureaucratic hurdles, political instability and inflation are the top three concerns of businesses operating in India. It is because of these bureaucratic hurdles that ArcelorMittal decided to scrap its 12-million-tonne steel project in Odisha. 
 
The organization faced significant delays in acquiring land and ensuring captive supply of iron ore. ArcelorMittal had planned on investing Rs 40,000 crores in the Odisha project and with the scraping of this project, India suffered the loss of Rs 40,000 crores. Similarly, South Korean steel giant Posco scraped a steel project worth Rs 319 billion (US$ 5.3 billion) in Karnataka because of bureaucratic hurdles. 
 
With investments slipping away, India cannot expect much progress. With fewer investments, there will be less exports and this will have an impact on the revenue of the country. 
 
In addition, when the production of goods goes down in a country, or when the supply of goods is significantly lower than the demand, the rate of inflation rises in the country. And these are the problems that India is facing at the moment. 
 
Putting the solutions on paper is easy but implementing them is extremely difficult, given the size of the nation and the complexity of the bureaucratic system.
 
Last year, the government increased foreign direct investment (FDI) caps in a number of sectors, including the telecom and defence. This is one way of increasing investments in the country. 
 
Another way is to eradicate red tape that deters companies from investing in the country. The government should provide incentives to businesses in the form of tax rebates and this will attract more firms to set up businesses here.
 
The government should also encourage firms to increase their rate of production. Only when the production rate increases will the country be able to export its products. And when the export value rises, the country will be able to make money.
 
This way, India will be able to reduce its current account deficit and have money to spend on its citizens’ welfare. It is also through an increase in the rate of production that we will witness a decrease in the inflation rate. In economics, everything is interlinked – when you make a change in the system, you will see changes in a number of areas. 
 
So, the Indian government need not tackle current account deficit, inflation, low export value and low investments separately. All these are interlinked and can be tackled by attracting investors into India and increasing the rate of production.
 
The reasons for the ailing Indian economy are obvious and the solutions are staring at us too. However, implementing these measures is a challenge. The government has to implement measures in stages because of the complexity and enormity of the problem. 
 
However, it is not impossible for the Indian economy to recover. By measuring the success rate and the impact of each measure, the government will be able to enhance the growth of the Indian economy significantly.
 
  
 
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