Steps to bounce back the Indian Economy| Important Points

Share it

Table of Contents

Steps to bounce back the Indian Economy

Important steps to bounce back the Indian economy are discussed below:

Economic Factors

Gross fixed capital formation declined (29% of GDP in 2018-19 to 24.2% in 2020-21). We need to reverse this trend.
The government will need to step up public investments to boost growth. In a developing economy growth is sustained only by investment.
The steep cut in corporate tax rates in 2019-20 to 22% for domestic companies and 15% for domestic new manufacturing companies from 30% provided they give up exemptions and the minimum alternate tax – have translated a revival of India’s medium term growth prospects.
Production linked incentives(PLIs) for manufacturing would take some more time to work through the system.

‘Increase demand and purchasing power of consumers’ : The Indian economy has been contracting since the last few quarters even before Covid-19 came. The lockdown due to Covid-19 resulted in further contraction of up to 23.9 per cent in GDP in first quarter of 2020-21. In my opinion, the economy will be in a better position only when end consumers will spend more, but right now consumers are spending money more rationally because millions have lost their jobs and million others are in constant fear of losing their job anytime.
Unemployment will destroy the backbone of a nation. That’s why the government needs to create more job opportunities, especially for young talent. The government needs to provide skill-based education and provide more internships and so on to help students achieve their dreams. If a family is self-sufficient, then a nation’s economy is self-reliant too.
‘Govt needs to import less, export more’ : To revive the economy of India, government need to boost the manufacturing sector. Mobile phones and electronic products are not actually made in India but are only assembled in India. India needs real ‘Made in India’ products. India is the leading supplier of medicines but still dependent on China for API (active pharmaceutical ingredients). India needs to produce API on its own. The Indian pesticide industry is also highly dependent on imports for the raw materials. India is one of the biggest consuming countries. And it’s high time that it appreciate its manufacturing units.
The COVID pandemic has brought a robust anti-china wave globally, which allows India to exploit on this positioning. Also, the positive image of India over the years merged with the countries looking for an alternative to china give India once in a millennium opportunity to grab the preferred destination spot for manufacturing and outsourcing. Reforms like rationalizing land acquisition and labour laws, logistical and trade facilitation to curtail the transaction costs are some of the factors that may lead to FDI influx.

Non-Economic Factors

India should take leadership role on various international economic issues for mobilising support from likeminded countries of the world for strengthening the bargaining positions of the developing countries on the current issues of negotiations. India along with other likeminded countries, should mount pressures in the WTO and other forum to include code of conduct and the obligations of the multinationals for transferring technology, sharing information and promoting employment, in any multilateral agreement.
Peaceful environment : It is must for getting the FDI in the country. we have to give positive signal to the world that India is safe for the business.
Social Cohesion : Government should have take steps to fill the gap which is created between different caste, creed of the society.
Protest over farm bills : Right now the country is facing a big protest over three farm bills. There is a pros and cons of every decision of government over this issue. One of them may be to leave these decisions(implementation of farm laws) at the level of state governments.

Also refer :