Challenges Before Indian Economy
Challenges Before Indian Economy
Challenges Before Indian Economy
INTRODUCTION
India economy, the third largest economy in the
world, in terms of purchasing power, is going to
touch new heights in coming years. As predicted
by Goldman Sachs, the Global Investment Bank,
by 2035 India would be the third largest economy
of the world just after US and China. It will grow to
60% of size of the US economy. This booming
economy of today has to pass through many
phases before it can achieve the current
milestone of 9% GDP, But to achieve all that
success India has to face many hurdles. Here I
will show you challenges before Indian economy.
Poverty
Poverty is a situation in which a person is unable to get
minimum basic needs of life - Roti, Kapda, Makan - Food,
Clothing and Shelter.There are many in India who do not
get enough food even once a day.We can see in our
neighborhood many children and even adults who are high
malnourished.They are the people who also do not have
decent clothes.You can see their houses in foot paths or in
slums.You can find young children employed in Dhabas,
Shops instead of going to school
Measurement of Poverty
Those whose income is very low, they can be called poor.In
1999-2000, Government decided that those who earn below
the following limits are said to be living below the poverty
line.This poverty line was: Rs. 328 p.m. per capita in rural
areas and Rs. 454 p.m. p.c. in urban areas.On this basis, India
has around 26 crores in rural and 26 crores in urban areas who
are below the poverty line [BPL] as per 1999-2000 statistics.
There is also another method to identify poverty
Those who have low nutrition levels can be said to be poor.The
minimum nutritional requirement per person is 2100 calories
per day in urban areas and 2400 calories in rural areas And
those who live below this calory level are poor people.
Who are these poor people?
Landless labourers
Agricultural labourers
Casual labourers
Seasonal labourers
Those employed in handicraft industries
Unemployed people
CAUSES OF POVERTY
-during the British rule they discouraged the traditional
industries and textile industry.Millions suffered. Even after 50
years of Independence India, the large section of people
engaged in handicraft industries are in a poor condition.
REMOVAL OF POVERTY:
- govt has taken efforts to develop the heavy industries and green
revolution which would lead to rapid economic
development.Introduction of
-to help the existing poor families to come above the poverty
line.
Unemployment
Unemployment is of different kinds
1. Pure unemployment - the person is willing to work but he could not find
gainful job
2. Under employment - the Person is a Post Graduate but is forced to take
up a menial job not befitting to his qualifications
3. Seasonal unemployment - agricultural workers get employment only in
the season
4. Cyclical unemployment - unemployment due to slackening of demands
for goods
5. Technical unemployment - staff reduction due to change in technology
6. Disguised unemployment - Less work and more people
SKILL DEVELOPMENT:
- a skilled labour is one who has proper training and education to
work in a particular field.
With a view to impart shills through training, the govt of India has taken
many steps.
ENTREPRENEURIAL DEVELOPMENT:
- Low cost capital provided by the Govt to small enterprises and
self-employed persons to develop their entrepreneurial ability.
- All the above have helped in expansion of India’s industries and
business into newer domains and regions.
- the rapid population growth has created an army of labour force.
PRICE RISE
- How it is measured? The average price of all the goods and services
are selected for the 1st year and considered as a base year and given an
index of 100. During the next year if the average price rises by 25% over
previous year then the price index for the 2nd year is 125 and so on
- The consumer price index includes those items, which are consumed
generally by workers of all categories such as agricultural labourers,
industrial workers etc.
- The consumer price includes goods such as food items, clothing and
other essentials.
services increase. If the supply of these goods and services are not
and services.
- Some people with an aim to make quick profit hoard the goods and
create an artificial demand and then they sell the goods at a higher price.
This is called hoarding and black marketing.
WHY REGULATION OF PRICES
- Generally moderate price rise is regarded good for an economy.
- When the producers want to raise their standard of living, they will
demand higher price for their products. This will lead to an increase in the
cost of production and thereby price rise. Finally the consumers have to
pay higher price. If the benefit of increased price will go to the workers then
this is good for the economy.
- Regulation is needed when traders make more profit and do not share
it with their workers by way of increased wages etc. Some times the
traders profit through the essential commodities such as milk, rice, wheat
etc. Here the Govt interferes to regulate the price rise.
- Monetary measures: Whenever there is price rise Reserve Bank of India
reduces the money circulation in the economy. This reduces the tendency
of the consumer to spend, results in less demand for goods and thereby
lowers the price.
- Fiscal Measures: By imposing high taxes on high- income groups and
many consumable goods. When people have less money then they will
spend less and this results in price decline.
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