{"id":199850,"date":"2022-08-12T18:45:43","date_gmt":"2022-08-12T13:15:43","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=199850"},"modified":"2022-08-12T18:45:43","modified_gmt":"2022-08-12T13:15:43","slug":"state-holds-back-nation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/state-holds-back-nation\/","title":{"rendered":"State Holds Back Nation"},"content":{"rendered":"\n

Source<\/strong>: The post is based on an article \u201cState Holds Back Nation<\/strong>\u201d published in the Times of India on 12th<\/sup> August 2022.<\/p>\n

Syllabus: GS 3 <\/strong>Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development\u00a0and\u00a0Employment.<\/p>\n

Relevance<\/strong>: Inclusive Growth and Prosperity of India<\/p>\n

News<\/strong>: India\u2019s economic fundamentals and demographic composition can help it in making widespread prosperity a reality in the next two decades or so.<\/p>\n

Strong Fundamentals of India<\/strong><\/h5>\n

Economic Fundamentals<\/strong><\/p>\n

(1) The policy initiatives on infrastructure development<\/strong>, digitization of the economy<\/strong>, and a push towards rural developmen<\/strong>t have created a conducive environment<\/strong> for inclusive growth.<\/strong><\/p>\n

(a) India\u2019s transportation infrastructure<\/strong> has been improving steadily. Cities and towns in remote parts of the country are now much better connected. Therefore, there is increased mobility of labor, capital,<\/strong> and raw materials which <\/strong>could spur economic growth even in most interior parts of the country.<\/p>\n

(2) Digitization of Indian Economy: <\/strong>In terms of digitization of the economy, India is by far the world leader in digital payments and transactions. For Example, in 2021, the number of real-time digital payment transactions<\/strong> in India was almost threefold that of China. The digital revolution has the potential<\/strong> to unlock the country\u2019s entrepreneurial spirit<\/strong>.<\/p>\n

(3) India has made commendable progress in improving the quality of lif<\/strong>e of its rural population. For example,<\/strong> rural India\u2019s access to clean fuel for cooking increased from 18% of the population in 2012 to 54% in 2020.<\/p>\n

Demographic Fundamental<\/strong><\/h5>\n

India\u2019s workforce can contribute to economic development through increased labor supply and higher productivity.<\/p>\n

What is the metric to measure the increase in prosperity of India?<\/strong><\/h5>\n

A key metric of the mass prosperity of any country is its per capita income. For India to come close to upper-middle-income countries on this metric, it needs a fourfold increase in its per capita income.<\/p>\n

The Possible Measures to Achieve a Four-Fold Increase in Per-Capita Income <\/strong><\/p>\n

(1) Growth and distribution<\/strong>: (a) India\u2019s GDP growth needs an average annual growth rate<\/strong> of 7% in the next 25 years, and (b) States like Bihar and Uttar Pradesh must grow at a much higher rate to catch up with more prosperous<\/strong> states like Gujarat and Haryana.<\/p>\n

(2) Drivers of growth: <\/strong>India\u2019s long-run economic growth will depend on an economic system that provides strong incentives for productivity gains through<\/strong> technological innovation<\/strong> and capital formation<\/strong>. For this India needs a market-based system, where the private <\/strong>sector is much involved<\/p>\n

Can India achieve productivity gains and capital formation that can set it on a 7 % GDP growth rate path?<\/strong><\/p>\n

Although it is not easy, undoubtedly it is achievable due to the following reasons:<\/p>\n

(1) India has irreversibly moved towards a market-based system<\/strong> since the 1991 liberalization. <\/strong><\/p>\n

(2) Furthermore, the speed of reform, like the pace of privatization<\/strong> has picked up in recent years.<\/p>\n

What more measures do we need to move towards a 7% growth rate?<\/strong><\/p>\n

(1) India needs to speed up the privatization of the loss-making public sector banks<\/strong>: A market-based banking sector will be in a solid position to allocate capital efficiently<\/strong> and productively<\/strong> across different sectors of the economy. It will lead to the creative destr<\/strong>uction of underperforming companies<\/strong>, and will eventually pave the way for sustained economic growth.<\/p>\n

(2) In addition, India will also need a lot of new private enterprises like start-ups <\/strong>spread across the country to meet its growth target of 7%.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article \u201cState Holds Back Nation\u201d published in the Times of India on 12th August 2022. Syllabus: GS 3 Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development\u00a0and\u00a0Employment. Relevance: Inclusive Growth and Prosperity of India News: India\u2019s economic fundamentals and demographic composition can help it in… Continue reading State Holds Back Nation<\/span><\/a><\/p>\n","protected":false},"author":10343,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10496],"class_list":["post-199850","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704827823},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/199850","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10343"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=199850"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/199850\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=199850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=199850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=199850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}