Question

Measures taken by india governments to overcome unemployment,inflation and poor infrastructure planning problems in their country.

Answer 1

The economy of India is one of the fastest growing in Asia after China and has emerged as one of the key hot spots of investment for all major companies thanks to the fact that the country has a large and diverse population which has rapidly been seeing an increase in income, consumption, demand as well as overall lifestyle. The access to modern day facilities such as education, health care and nutrition has also increased over the years, which has made the economy a better one than it used to be in the mid 1980's-1990's respectively.

The following are some of the key ways in which India has addressed the specific problems as listed in the question.

1) Unemployment: -

In the early 1990's, the country was going through extreme recession, and there were hardly any jobs available in the market even for the educated people. This then meant that the living conditions of people were deplorable and the imports far exceeded the exports by the country respectively.

This however, was changed by the policy of Privatization and Globalization which were implemented in the year 1990. This allowed, the government to disinvest money from companies which it held and protectionist norms were reversed. As private players came into existence, the productivity levels increased and the economy begin its growth path wherein companies across the globe also came in due to the increased globalization policies of 1990's.

Further, the government through this increased revenue has implemented numerous reforms in the health care as well as education sector which has increased employment in the country.

Further to this, various schemes such as minimum employment guarantee scheme has been launched over the years, which guarantees a certain day of employment in the rural sectors of the country as well.

2) Inflation: -

Inflation be it positive in which the prices of goods and services rise beyond a certain level, or recession which creates an atmosphere wherein the aggregate demand and the prices both remain low, are bad for any economy. As India progressed and enabled its economy to be open to trade as well as privatized, global problems became local for the country and it experienced regular recessions and inflation as the rest of the world did.

However, one of the most critical decisions taken by the government was to establish the Reserve Bank of India which was established in the year 1935 and was aimed at providing direction to the commercial banks on how to operate themselves and regulated the flow of money in the economy. by measures such as increasing or decreasing the interest rates as and when required so as to provide protection to the economy from inflation or recession respectively.

This institution along with government reforms such as increasing employment and reducing or increasing tax during an inflation or a recession cycle are seen as steps that have helped the economy in remaining stable over the years.

3) Infrastructure Problems: -

As the government introduced the policies of Liberalization, Privatization and Globalization, companies began expanding into sectors they were previously prohibited from and this expansion post the 1990's, led to great revenues for the country which has also seen up to two-digit growth rates in the recent years. Even when most economies were having extremely low growth numbers, Indian economy remained stable due to its expanding nature. Multinational companies came into existence and have outgrown and now provide services to all major countries across the globe.

As companies and their revenue increased in size, the government and its tax collections also grew. This led to rapid development of infrastructure by both private companies for their own use, as well as by the government for better living conditions for one and for all.

Thus, the infrastructure problem was solved by allowing private people to participate in the free markets which led to tax collections on one hand, and for earning profits, private companies themselves also increased their infrastructure requirements which helped the economy in both sided growth.

Please feel free to ask your doubts in the comments section if any.