As the world continues to evolve at a rapid pace, the role of government becomes increasingly critical in addressing pressing challenges and seizing new opportunities. As we look to the future, it is imperative that the next government prioritizes key areas that will significantly impact the well-being and prosperity of its citizens. Among these priorities, five stand out as essential for fostering a resilient and thriving society.
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In News: A recent article delves into the recent economic performance of India and highlights five crucial areas requiring attention from the forthcoming government.
Current State of the Indian Economy in Different Sectors
- Robust Growth
- India’s economy has demonstrated robust and resilient growth over the past decade, positioning itself as the fastest-growing economy among G20 nations and climbing to the 5th largest globally.
- Current Account Deficit
- India’s current account deficit has significantly reduced to 1% of GDP in the first half of FY24, attributed to resilient service exports and decreased oil import costs.
- Foreign Investment
- Robust foreign institutional investor (FII) inflows have bolstered forex reserves to approximately $643 billion, with FII inflows standing at $41 billion in 2023-24.
- Infrastructural Development
- Significant infrastructural development has been witnessed, with the construction of 74 airports in the last 9 years and a surge in capital expenditure (Capex) to 3.3% of GDP for FY24.
- Manufacturing Sector
- Manufacturing sector capacity utilization is reaching 74%, nearing the long-term average, indicating potential acceleration in private capital expenditure.
- Inflation
- Consumer Price Index (CPI) inflation has dipped below the Reserve Bank of India’s upper target band of 6%, with core inflation remaining below 4% in April 2024, primarily due to disinflation in the services sector.
- Decline in Urban Unemployment
- Urban unemployment rate saw a decline to 6.6% in 2023-24, accompanied by an estimated economic expansion of 7.3% in the same period.
- Rural Demand
- Positive trends in rural demand are evident, with Fast Moving Consumer Goods (FMCG) volume growth in rural areas surging from 2.2% to 6.2% in the latter half of 2023, according to a Nielsen report.
Challenges Faced by the Indian Economy in the Past Five Years
- Slowdown in Economic Growth
- The COVID-19 pandemic led to a substantial economic decline in India in 2020, causing a negative growth rate, although there was a strong rebound in 2021.
- Unemployment and Underemployment
- The pandemic exacerbated job losses, with significant impacts on salaried jobs and a varying unemployment rate.
- Challenges in Agriculture and Allied Sectors
- Despite recent GDP growth, the agricultural sector has not shown equivalent progress, with challenges in achieving desired growth rates.
- Slowing Household Consumption and Income Inequality
- High levels of income inequality lead to deterioration in consumption demand, especially for lower income classes.
- Infrastructure Deficit and Private Investment
- India faces a significant infrastructure deficit and declining private investment, particularly concerning transportation, energy, and healthcare infrastructure.
- Export Challenges Amid Geopolitical Tensions
- Geopolitical tensions can disrupt global trade patterns, affecting India’s export performance.
Initiatives Taken for the Growth of Different Sectors in the Indian Economy
- New Economic Policy, 2020
- A substantial stimulus package aimed at bolstering various sectors and segments of the economy post-COVID-19 crisis.
- Strategic Disinvestment
- Privatization of public sector enterprises to enhance efficiency, profitability, and competitiveness.
- Comprehensive Labour Codes
- Introduction of labor codes to streamline and consolidate central labor laws, aiming to offer flexibility and simplify procedures for businesses.
- Production-Linked Incentive (PLI)
- A scheme to scale up domestic manufacturing capability.
- PM Gati Shakti- National Master Plan
- Formulation of a national master plan for multimodal connectivity infrastructure projects.
- Bharatmala Project
- A project aimed at improving connectivity, particularly in North East India.
- Start-up India
- Initiative to catalyze the startup culture in India.
- Make in India 2.0
- Effort to transform India into a global design and manufacturing hub.
Potential Areas of Focus for the Indian Economy
- Creating Employment Opportunities
- Policies aimed at boosting consumption to indirectly contribute to sustainable job creation.
- Reviving Private Investment
- Expansion of schemes like PLI and introduction of investment incentives to stimulate private sector participation.
- Agricultural Reform
- Addressing challenges in the agricultural sector, clarifying trade policies, and standardizing procurement and distribution procedures.
- Boosting Household Consumption
- Fiscal measures to stimulate consumption and address declining household savings.
- Integration into Global Supply Chains
- Strategic approach to enhance India’s participation in global supply chains, particularly in merchandise exports.
| UPSC Previous Year Questions Prelims (2018) Q. Consider the following statements: 1. Human capital formation as a concept is better explained in terms of a process that enables individuals of a country to accumulate more capital. 2. increasing the knowledge, skill levels and capacities of the people of the country. 3. accumulation of tangible wealth. 4. accumulation of intangible wealth Which of the statements given above is/are correct? (a) 1 and 2 (b) 2 only (c) 2 and 4 (d) 1, 3 and 4 Ans: (c) Prelims (2013) Q. Disguised unemployment generally means (a) large number of people remain unemployed (b) alternative employment is not available (c) marginal productivity of labour is zero (d) productivity of workers is low Ans: (c) Mains (2023) Q. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. |
Source: IE
1. What are the primary areas the next government should prioritize for economic growth?
Answer: The next government should focus on:
- Economic Diversification: Reducing dependence on a single industry and fostering growth in sectors like technology, manufacturing, and renewable energy.
- Infrastructure Development: Investing in transportation, digital infrastructure, and public utilities to facilitate business operations and improve productivity.
- Job Creation: Implementing policies to support small businesses and startups, and investing in education and training programs to prepare the workforce for future jobs.
- Tax Reforms: Streamlining tax policies to create a more business-friendly environment and encourage investment.
- Trade Policies: Enhancing international trade agreements and reducing barriers to export for local businesses.
2. How should the next government address environmental concerns?
Answer: The next government should prioritize:
- Renewable Energy: Investing in solar, wind, and other renewable energy sources to reduce carbon emissions.
- Climate Change Mitigation: Implementing policies to meet international climate agreements and setting aggressive targets for carbon reduction.
- Conservation Efforts: Protecting natural habitats and promoting biodiversity through stricter regulations and conservation programs.
- Sustainable Agriculture: Encouraging sustainable farming practices to reduce environmental impact.
- Pollution Control: Enforcing stricter regulations on industries to control air, water, and soil pollution.
3. What steps should the government take to improve healthcare?
Answer: Key steps include:
- Universal Healthcare: Expanding access to affordable healthcare for all citizens.
- Healthcare Infrastructure: Investing in hospitals, clinics, and healthcare technology.
- Preventive Care: Promoting preventive measures and public health campaigns to reduce the incidence of chronic diseases.
- Mental Health Services: Increasing funding and resources for mental health care and removing the stigma associated with mental health issues.
- Healthcare Workforce: Addressing shortages in healthcare professionals through training programs and incentives.
4. What educational reforms are necessary for the future?
Answer: Important reforms include:
- Curriculum Modernization: Updating the curriculum to include digital literacy, critical thinking, and problem-solving skills.
- Teacher Training: Providing ongoing professional development for teachers to improve teaching quality.
- Access to Education: Ensuring equal access to quality education for all, particularly in rural and underserved areas.
- Higher Education Funding: Increasing funding for higher education and vocational training programs.
- Technology in Education: Integrating technology into the classroom to enhance learning experiences and outcomes.
5. How can the next government strengthen national security?
Answer: To enhance national security, the government should:
- Cybersecurity: Investing in cybersecurity measures to protect critical infrastructure and data.
- Military Strength: Ensuring that the military is well-equipped and trained to handle modern threats.
- Intelligence Gathering: Improving intelligence capabilities to preemptively identify and neutralize threats.
- Border Security: Implementing advanced technologies and stricter controls to secure national borders.
- International Cooperation: Collaborating with global allies to address transnational threats like terrorism and cybercrime.
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