A Short Note on Reasons and solutions for Ailing Indian Economy

India’s economic growth has been declining to an all-time low, whereas the world’s economy is growing. The Indian economy is facing a severe slowdown with a GDP growth of 6.3% for the fiscal year 2020. The growth rate is the lowest in the last 6 years. It is also projected to further slow down by 6.2%. The available data shows that the Indian economy is facing a crisis due to some important factors like increased unemployment, rural distress, liquidity crunch, and some international factors. These are the main reasons for the economic problem in India. However, some solutions for the Indian economy and its decline will be discussed in detail below.

A Brief Outlook on the Reasons for Ailing Indian Economy

The basic reasons for the ailing of the Indian economy are:

1. Low per capita income 
2. Dependence on agriculture of the large section of the population 
3. The problem of rising population and limited resources.

Various economic factors that affect the economy of India. They are:

• Population and human resources 
• Natural resources 
• Capitalism 
• Investment patterns
• Occupational structures 
• Market extents 
• Technology 

The growth of the Indian economy has been declining since 2016. Since March 2020, Covid -19 has been deteriorating the economy of India. Even before Covid -19, India’s economy was crushed to a severe extent. 

The Centre for Monitoring Indian Economics, an independent research firm, has raised industrial production “from down to downer” during the last few years.

Also, economic experts have contradictory concerns about the ailing of India’s economy. Most of them converge on a few factors and have similar ideas for ailing India’s economy. 

Reasons and Solutions for Economic Problems in India

There are many reasons for the ailing Indian economy that are not limited. We shall briefly discuss a few of them on which there is no conflict of thinking among economic experts.

Lesser Investments

Investment is the main key to the economic growth of any country. It helps in business activities from establishment to development of business. Investment creates more opportunities for jobs, higher earnings, and higher spending. This lesser investment cycle is the main reason for the ailing economy of India. FIIs have withdrawn their money from the Indian market in the last few years.

Solution for this reason

Investment revival is needed for the growth of the Indian economy. There are several steps that need to be taken by the government of India, including,

• The raising of its investments in public Infrastructures and assets.
• Investment of Foreign Institutional Investors (FIIs) to be attracted.
• Relocation of India’s supply chain would provide some support for the export outlook.

Inefficient Agricultural Policy and Climatic Conditions

In India, a lot of agricultural produce gets ruined due to the lack of sufficient agricultural policy. In one part, produce gets wasted due to higher production, and in the other part, surplus produce gets wasted due to mismanagement of storage. 

In the case of sugar production, the sugarcane yields 60% more returns than its comparable crops, and many farmers adopt the cultivation of sugarcane, leading to a surplus. This surplus production contributes to low farmer incomes.

In India, much of the agricultural land cultivation depends upon climate conditions, and a poor monsoon leads to a lower area under cultivation resulting in lower rural income generation. 

The Indian agricultural sector has managed a large population in occupational engagement and the livelihood of the rapidly increasing population of India. As per a survey of the World Bank, in 2014, nearly 47 percent of the working population in India was engaged in agriculture, whereas it had contributed hardly 17 percent to the national income. This low productivity per person in the agriculture sector could not attract the government’s focus towards this sector for their betterment. The expansion of industries also failed to attract enough manpower from this sector.

Solution for this reason

Government should make policies for agricultural development, proper storage and distribution of agro products, and management of rural manpower employment when there is no work in agriculture for them. 

Unemployment 

Unemployment is not a one-day problem. Since India won freedom, it has been a burning issue, and no government has given due weight to this problem.

In the last few years, many people have lost their jobs, and the government lacks sufficient aid. The increasing number of educated-unemployed problems added to the woes of the country.

Solution for this reason 

The Government of India should widen the platform of the public and private sectors for creating more jobs and promote new areas of the business to convert job seekers to job creators/providers. The government should focus on the expenditure on education, skill training, research, and development. 

Hike in Oil Price

Petroleum products are one of the main contributors to the ailing economy of India. It is a major player in the economy and gives a clear growth rate. A hike in prices affects the economy of India. 

Solutions to this reason

Government should make policies for alternative energy resources, green energy, nuclear energy, wind energy, solar energy, etc. These energies reduce air pollution and also create other opportunities to some extent.

Slow Demand for Consumer Products and FMCG

A sharp fall in demand for consumer products is a basic concern of an economic slowdown. The rural market of India has been facing this slowdown for the last few years. This impact is seen in the market of fertilisers and agricultural inputs manufacturers. The fast-moving consumer goods FMCG market has also seen a big slump. The FMCG market has expanded from metro cities to rural markets and has been slowing down its market drastically. GST and other tax reforms have drawn liquidity from public hands.

Solutions to this reason 

The government should recognise this FMCG market and give a proper concentration so that this macroeconomic market can be developed and the government gets to benefit in return in the form of taxes.

Conclusion 

The economy of India is a fast-growing economy. The present economic scene after Covid -19  in India is more or less encouraging. Still, we are far from economists’ expectations of achieving employment, poverty eradication, education for all, and industrialization. Government can come out from the present situation of an ailing economy. With focused targets and remedial measures to resolve the economic problems, India will surely become a developed economy.