The policy of liberalization was adopted in India in the 90s to accelerate the economy, under which various sectors were opened up to the private sector and gradually the pace of India’s economy grew. India has become the sixth largest economy in the world, surpassing France shortly before. But given the ratio of India’s size and capacity, the current state of the economy cannot be appreciated. Keeping this fact in mind, India’s policy makers have set a target of making India a $ 5 trillion economy in the next 5 years or by 2024.
Some analysts believe that India did not make rapid growth in the economic sector after independence, as a result, it took 55 years for the Indian economy to reach $ 1 trillion, while the Chinese economy continued to grow rapidly during this period. Due to limited economic capacity of India, often necessary resources have not been available in different areas. In India, there is often a lack of funds for many areas such as railways, social sector, defense and infrastructure etc. The government is considering to overcome the shortage of resources by increasing the size of the Indian economy.
There is a difference of opinion among economists regarding the above idea. Some economists believe that India will need a growth rate of around 8 percent of GDP to achieve the $ 5 trillion goal. At present, many economists are talking about slowing down of the Indian economy, and in this situation, achieving high economic growth rate is a difficult goal.
The government has clarified its policy in the Economic Survey and Budget and has committed to achieve this goal. It has been published in the Economic Survey that topics such as employment generation, savings, consumption and demand should not be viewed separately. The Chief Economic Advisor to the government believes that with the current GDP growth rate of 7 percent, it is possible to transform into an economy of 5 trillion if we accelerate investment and target 8 percent growth. Investment is considered to be the most important, and they believe that it is also necessary to get out of the vicious cycle of liquidity, demand shortage, underinvestment, underproduction and low growth. By increasing investment and savings and increasing production and demand, it can be pushed towards rapid economic growth.
- The government has laid emphasis on infrastructural development with special focus on rural roads, waterways and affordable housing so that there is a regular increase in the ease of living. The target of construction of 1.95 crore houses has been set only in the Pradhan Mantri Awas Yojana. The government has also approved an additional deduction of Rs 1.5 lakh on the interest payment of the home loan.
- A number of announcements have been made for the promotion of private higher education under the ‘Study in India’ initiative, while the government is also committed to the creation of world-class institutions and the establishment of sports universities under the ‘Khelo Bharat’ initiative.
- The government has also announced the establishment of a sovereign debt market. This will help the government to replace high cost domestic debt with cheap international credit and thus help in reducing interest rate.
- Apart from this, to help private capital formation, the government has promised new capital investment of Rs 70,000 crore in public sector banks. The government will also set up financial development institutions to support long-term projects and to tackle asset-liability imbalance.
- To promote consumption and address issues related to Non-Banking Financial Institutions (NBFCs), the government has expressed its intention to purchase an asset pool of up to Rs 1,00,000 crore from NBFCs with public sector banks up to 10 percent Loan guarantee will be obtained on loss.
- At present, the private sector is mostly over-leveraged and is under pressure to repay loans. He also has a huge shortage of capital. For capital formation, the government will have to maintain its dependence on foreign capital and hence it is moving on the policy of liberalizing foreign direct investment (FDI) especially in insurance, aviation and single brand retail.
- Special allocation has also been made by the government for micro, small and medium industries (MSME). To strengthen manufacturing, the government has announced to unify the 55 labor laws into four codes and increase the minimum wage.
- The government has reduced the corporate tax to 25 percent for small enterprises with a turnover of up to Rs 400 crore.
- Modernization of the railway requires an investment of about Rs 50 lakh crore. The government has proposed Public Private Partnership (PPP) to augment its resources. Initiatives such as construction of national electricity grid and warehousing grid will have far-reaching benefits.
- Tax compliance is very important for ease of doing business. The government’s plan to implement e-assessment will bring a major change. This will bring transparency and reduce the harassment of taxpayers through individual human intervention.
- The government has taken an initiative to resolve pending indirect tax lawsuits through the Heritage Dispute Resolution Scheme. The scheme covers past disputes and provides relief from 40 to 70 percent. In addition, it also provides relief on interest and penalty.
The budget has allocated Rs 3,31,610 crore for Center-sponsored schemes, increasing the amount provided by 8 percent. The government’s total expenditure is 13.4 percent higher than the revised estimates. The fiscal deficit is controlled at 3.3 percent of GDP. This budget fulfills the aspirations of investment and development without giving a jolt to fiscal mathematics.
- The above efforts are indicated in the government’s budget, which the government considers necessary for achieving its goals. However, there is another aspect of the coin according to which the above mentioned efforts of the government to achieve the target of $ 5 trillion are considered inadequate, along with the weaknesses in India’s economy and its fundamental structure, the biggest obstacle in achieving this goal. She believes.
India’s energy sector is going through difficulties and the sector needs to be reformed at a structural level. The Center needs to improve the tariff policy in collaboration with the state governments so that industries and large consumers get the benefit of it, as well as increase in tariff rates for agriculture sector and domestic consumers. The agriculture sector is already grappling with the irrigation crisis due to high electricity usage and it can also help in improving the economic condition of DISCOM, along with rationalizing the power usage at the level of the domestic consumer, in this context, increase in tariff rates. Necessary.
There has been a seven-fold increase in renewable energy in the last decade but still India’s energy sector remains mainly coal based. This type of coal plant produces 80 percent energy. The transmission of this type of energy is inefficient and wasteful. The capacity of the energy sector can be increased by increasing the production of renewable energy and improving transmission. This will enable the region to meet the energy needs of industries and consumers. It is known that energy plays a very important role in promoting manufacturing in a country’s economy.
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