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News: Recently, the National Statistical Office (NSO) announced that the fourth quarter GDP growth rate of the FY 2021-22 stands at 4.1% compared to fourth quarter figures for the previous year, 2020-21.
What are the important considerations in terms of the Indian Economy?
Some Indian economists believe that the Indian economy has been consistently declining since 2016.
It is also believed that the growth rate of GDP has fallen below the “The Hindu Rate of Growth” which was around 3.5%-4% per year during the period between 1950-77.
Major macroeconomic goals like a $5 trillion GDP by 2024-25 are impossible to achieve without major reforms because this requires a growth rate of 14.8% per year in GDP.
Dynamics of democracy
In every nation, democracy is structured on four pillars: (1) electoral legitimacy, (2) constitutional safeguards, (3) functionally independent institutions, and (4) embedded accountability.
There are conflict situations between the market and democracy that requires to be resolved:
(1) In a flourishing and vibrant democracy. The masses are empowered to vote. Therefore, the masses can influence legislation against the relatively rich capitalist and entrepreneurial minority
(2) A thriving market economy driven by a rich empowered minority having disproportionate access to capital, skills and media and other networks has the capacity to undermine the electoral system. They can do so through strategic funding of the same.
Therefore, there is a need to understand the dynamics of democracy. The economic conditions play an important role in electoral victory. For example, economic failures could lead to the threat of democracy by desperate political extremists.
Way Forward
India needs a new economic policy. This policy should be based on clearly stated objective targets, and priorities. Further, there should be a strategy to achieve the state’s targets. In addition, an intelligent and transparent resource mobilisation plan is also needed.
The government while doing economic reforms must ensure that the deregulations are not utilized by few rich minorities corruptly. The unorganised poor do not face the bad impact. For this the government must reduce unemployment and control galloping inflation.
It is important to empower the democratic institutions to guard against public disorder arising from rapid de-regulation. For example, in the post-1991 period, Russia underwent chaos and misery. Thus, dictatorship has returned for the Russians.
There is a need for the establishment of affirmative action, social security and a safety net for the poor in the system.
The level playing field should be provided to create hope, ensure transparency, accountability, and trusteeship (philanthropy).
The corporate governance should be improved to legitimize profit making that drives the market system.
The government should promote market system capitalism. The principal driver is capital. It should be deployed for innovation to raise productivity.
Source: The post is based on an article “Modinomics and the long distance to the finish line” published in the “The Hindu” on 06th June 2022.
