Economic Economics 2019 of India mentions practical economics. Since 2017, economist Richard Thaler received the Nobel Prize on applied economics, since then the concept of practical economics has started to be discussed more. The Economic Survey of India has emphasized to use this concept for social change. Also, it can be helpful in bringing India’s economy to the level of $ 5 trillion by 2024-25. Programs like Swachh Bharat Mission, Jan Dhan Yojana and Beti Bachao-Beti Padhao have already demonstrated the ability to change the behavior of people in India.
Practical change can be made possible by using India’s rich culture and spirituality and social rules which play a major role in building and changing people’s behavior. However, it is worth noting that practical economics cannot be considered the only approach to policy making in any country.
What is practical economics?
It is believed that a person makes his decisions keeping in mind the best benefits of himself. Siddhant, the logical alternative to economics, also believes that a rational person takes his decisions after taking into consideration profit, utility and cost. The concept of practical economics is different from the above ideas, this concept holds that people’s decisions also depend on other things.
Practical economics works in conjunction with psychology and economics and studies the behavior of people and tries to understand why different people take different economic decisions for themselves in the same situation. In this regard, practical economics believes that people’s decisions are influenced not only by their rationality but also by other factors like emotions, mood changes, circumstances etc.
Practical economics is currently being used in different fields, different companies change the mindset of consumers through this concept, such as selling a commodity in a super market or shopping mall that the company has more emphasis on selling, Is represented to consumers with an attractive price. Similarly, companies show product choices in a way that, despite being a mediocre option, appears attractive to other inferior options.
Economic survey and applied economics
According to practical economics, human behavior is mainly influenced by society and its rules. Social and religious rules in India have an important place in people’s lives and change people’s behavior, keeping in mind the fact that practical economics can play an important role in bringing about necessary changes.
There are several schemes that underline the success of practical economics in India, such as Swachh Bharat Mission (SBM), Beti Bachao-Beti Padhao (BBBP), Voluntary LPG Subsidy Giving (Give it up) etc.
Influenced by the success of the above schemes, the Economic Survey found the principle of practical economy in reducing gender inequality in India, improving the health status of the people of India, promoting the habit of saving people, and developing a tax paying attitude The idea of using is also presented.
Applications of applied economics in the context of India
The use of Nudge theory of practical economics is considered very important from the point of view of policy making. According to this theory, a person is motivated to make necessary positive changes in his behavior. Also, the right of the person to choose is also protected. The Naj doctrine believes that people need guidance and encouragement to behave in accordance with the values of society or country. Keeping this idea in mind, various governments and institutions formulate policies. According to the OECD, more than 200 government institutions in the world are using behavioral economics or Nudge theory, this type of policies is also known as Nudge Policy.
Nudge policy examples
To increase tax compliance in India: Citizens can be motivated by giving information about the use of tax in public services through publicity and personal messages.
Reducing school dropout rates for children from poor families: By making parents aware of the usefulness of education and its economic benefits.
Increase in savings rate: by bringing people under attractive savings scheme etc.
Limitations of practical economics
- A scheme like giving up LPG subsidy on a voluntary basis is comparatively easy for practical economics as the scheme urges people who are considered to be conscious sections of the society and need to try only once. is. But schemes like Swachh Bharat Mission and Beti Bachao-Beti Padhao present a tough challenge to this concept. Such schemes require constant institutional efforts, and at the same time changing the behavior of people for centuries makes it more complicated.
- The community-based sanitation program, which is part of the Swachh Bharat Mission, included efforts to change people’s behavior, but targeted ad-based campaigns such as Beti Bachao-Beti Padhao in states where gender inequality exists. has not been. However, the situation in Haryana (where more gender disparity exists) has improved with this campaign. Despite this, public participation is also necessary to change the behavior of the people.
- Through this, it seems difficult in the near future to reduce corruption, discourage luxury living, take pride in the work of taxation, as well as encourage tax compliance. At the same time, practical economics can encourage the tendency of people to pay less tax, which will encourage the negative attitude of taxation.
In this scenario, the effectiveness of policymaking can be increased by combining government regulations, tax and free market policies with nudge effect. like-
BBBP (Beti Bachao-Beti Padhao) to BADLAV (Beti Aapki Dhan Lakshmi and Vijay Lakshmi).
- From Clean India to Beautiful India.
- Going beyond the subsidy of LPG and considering the rationality of subsidy.
- From tax evasion to tax compliance.
Through such efforts, one can be encouraged to change the behavior of the people according to the needs of the country. This principle can be useful in India to overcome various social evils, increase social harmony and take appropriate economic decisions from the point of view of economy. As a result, by 2024-25, the goal of reaching India’s economy of $ 5 trillion can be achieved.