How Indian Economy can be Improved

The inflation and sudden dip in economy has everyone whipped and how! As students we often question ourselves how does it have anything to do with us? The answer lies in the observation of the fact that being a country dealing with unemployment amongst educated youth right from the time of independence we wont be able to provide for more hands at work. The large numbers of technical graduates who pass out every year need a basic legal organization to start with their career. They might never take off if the MNCs who come to Indiaprimarily for economic reasons don’t get their due

It’s fashionable to say the era of strong emerging-market growth is over. As the U.S. recovers, the global cost of capital will rise, holding back investment; against this background, avoiding the next crisis is the best that most emerging economies can do. If you take this view, India might seem a perfect example, with its widening current account deficit, heavy public borrowing, persistent inflation and weak currency.  

Cultivating Growth

Like all Indians, Narendra Modi loves acronyms. Me too. I admire his MG-squared -- minimum government, maximum governance -- and P2G2 -- pro-active, pro-people, good governance.  

Long-term growth depends ultimately on just two things -- the number of workers and how productive they are. India’s demographics are remarkable. The country is on track to grow its workforce by 140 million between 2000 and 2020. That increase is the equivalent of the working population of France, Germany, Italy and the U.K. combined.  

It’s all about productivity. India scores poorly on indexes of economic variables that are critical for economic efficiency -- worse than Brazil, China and even Russia. To change that, it needs to do 10 things: 

1. Improve its governance. This is probably the hardest and most important task -- the precondition for the rest. 

India needs maximum governance and minimum government. There is no point having the world’s largest democracy unless it leads to effective government. 

2. Fix primary and secondary education. There has been some progress here, but a huge number of young people still get little or no schooling.

I just browse for Teach for All, a global umbrella organization for groups that encourage the brightest graduates to spend at least two years teaching. Today India has about 350 teachers in these programs. It could do with 350,000 or more.

3. Improve colleges and universities. India has too few excellent institutions. Its share of places in the Shanghai ranking of the world’s top universities should be proportional to its share of global gross domestic product -- meaning 10 universities in the top 500 (it currently has just one). Make that an official goal.

4. Adopt an inflation target, and make it the center of a new macroeconomic policy framework. 

5. Introduce a medium to long-term fiscal-policy framework, perhaps with ceilings as in the Maastricht Treaty -- a deficit of less than 3 percent of GDP and debt of less than 60 percent of GDP.

6. Increase trade with its neighbors. Indian exports to China could be close to $1 trillion by 2050, almost the size of its entire GDP in 2014. But India has little trade with Bangladesh and Pakistan. There’s no better way to promote peaceful relations than to expand trade -- and that means imports as well as exports. 

7. Liberalize financial markets. India needs huge amounts of domestic and foreign capital to achieve its potential -- and a better-functioning capital market to allocate it wisely. 

8. Innovate in farming. Gujarat isn’t a traditional agricultural producer, but it has improved productivity with initiatives like its “white revolution” in milk production. The whole nation, still greatly dependent on farming, needs enormous improvements.All States should comes up for the Advance Farming Techniques In order to boom up the Agro-sector as it contributes 18% to the National G.D.P with 56% workforce in it.

9. Build more infrastructure. There is no High Class Infrastructure in India . China gains its heavy economy because of High Developed Infrastructure as Shanghai.India needs to adopt some of that Chinese drive to invest in infrastructure. 

 

10. Protect the environment. India can’t achieve 8.5 percent growth for the next 30 to 40 years unless it takes steps to safeguard environmental quality and use energy and other resources more efficiently. Encouraging the private sector to invest in sustainable technologies can boost growth in its own right.