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News:The Economic Survey 2020 has illustrated enormous benefits from enabling the invisible hand of the market.
Facts:
Achieving $5 trillion economy:The survey has said that India’s aspiration to become a $5 trillion economy depends critically on:
- Strengthening the invisible hand of the market.
- Supporting it with the hand of trust.
About Invisible Hand:
- The phrase Invisible Hand was introduced by Adam Smith in his book ‘The Wealth of Nations’.
- It states that unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.
- In other words,it basically assumes that an economy can work well in a free market scenario where everyone will work for his/her own interest.
Suggestions:The invisible hand needs to be strengthened by promoting pro-business policies to:
- provide equal opportunities for new entrants, enable fair competition and ease doing business
- eliminate policies that unnecessarily undermine markets through government intervention
- enable trade for job creation and
- efficiently scaling up the banking sector to be proportionate to the size of the Indian economy.
