NEW
ECONOMIC POLICY – ECONOMY
News:
India needs a new economic policy
What's
in the news?
● The
National Statistical Office (NSO) has released the fourth-quarter GDP growth
rate figures for 2022-23. The current NSO data, when compared to the previous
year, present a more pessimistic outlook.
● Further,
analyzing NSO data since 2014-2015 yields three important conclusions.
What
conclusions can be made after analyzing NSO data since 2014-2015?
● The
GDP growth rate has been decreasing each
year since 2015-16, and it has now dropped in the fourth quarter to a level
of 3.5%.
● The
growth is similar to the Hindu Rate of
Growth observed during the 1950-77 socialism era.
● The
economic reforms taken under the leadership of P.V. Narasimha Rao and Manmohan
Singh led an increase in GDP growth to 6% to 8% annually, from 1991 to 1996 and
2004 to 2014.
● However,
recent years have seen a worrying and ongoing drop-in GDP growth rates since
2016.
Measures
to be taken:
1. Abolishing
personal income tax and eliminating the Goods and Services Tax (GST) are
crucial steps to encourage investors and earners.
2. The government should raise funds through indirect taxes and by printing currency
notes, which can be circulated by paying wages to the employment generated
in extensive public works.
3. The government should set fixed-term savings interest at around 9% to boost middle-class purchasing
power, and limit loan interest rates for small and medium industries to 6% to
increase production and employment.
4) India also requires a comprehensive new economic policy with clear objectives,
priorities, a strategic approach to achieving goals, and a transparent resource
mobilization plan.
5) In India, the market
system operates under rules and isn’t entirely free. However, market
capitalism thrives on incentives and capital, driving innovation, factory
productivity, and GDP growth. China also embraced this free market approach,
despite being a totalitarian.
However, it doesn’t imply full deregulation.
Government intervention is needed for safety nets, affirmative action,
addressing market failure, and ensuring a level-playing field.
WAY
FORWARD:
● Balancing the public sector and
deregulation, along with selling unprofitable units,
boosting employment through affirmative action, and ensuring access to social
security will help the poor in India.
● This
will also foster fairness in competition, ensure transparency, accountability,
philanthropy, and corporate governance, legitimizing profitable operations that
drive the market system.