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Future Challenges for Indian Economy
Future Challenges for Indian Economy - September 9th, 2010
Indian Economy: Future Challenges
Sustaining the growth momentum and achieving an annual average growth of 9-10 % in the next five years.
Simplifying procedures and relaxing entry barriers for business activities and Providing investor friendly laws and tax system.
Checking the growth of population; India is the second highest populated country in the world after China. However in terms of density India exceeds China as India's land area is almost half of
China's total land. Due to a high population growth, GNI per capita remains very poor. It was only $ 2880 in 2003 (World Bank figures).
Boosting agricultural growth through diversification and development of agro processing.
Expanding industry fast, by at least 10% per year to integrate not only the surplus labour in agriculture but also the unprecedented number of women and teenagers joining the labour force every year.
Developing world-class infrastructure for sustaining growth in all the sectors of the economy
Allowing foreign investment in more areas.
Effecting fiscal consolidation and eliminating the revenue deficit through revenue enhancement and expenditure management.
Some regard globalization as the spread of western culture and influence at the expense of local culture. Protecting domestic culture is also a challenge.
Global corporations are responsible for global warming, the depletion of natural resources, and the production of harmful chemicals and the destruction of organic agriculture.
The government should reduce its budget deficit through proper pricing mechanisms and better direction of subsidies. It should develop infrastructure with what Finance Minister P Chidambaram
International Research Journal of Finance and Economics - Issue 5 (2006) 171 of India called “ruthless efficiency” and reduce bureaucracy by streamlining government procedures to make them more transparent and effective.
Empowering the population through universal education and health care, India must maximize the benefits of its youthful demographics and turn itself into the knowledge hub of the world through the application of information and communications technology (ICT) in all aspects of Indian life although, the government is committed to furthering economic reforms and developing basic infrastructure to improve lives of the rural poor and boost economic performance. Government had reduced its controls on foreign trade and investment in some areas and has indicated more liberalization in civil aviation, telecom and insurance sector in the future.
The lesson of recent experience is that a country must carefully choose a combination of policies that best enables it to take the opportunity - while avoiding the pitfalls. For over a century the United States has been the largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the US and the rich countries of Europe to the two Asian giants- India and China. Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century. India, which is now the fourth largest economy in terms of purchasing power parity, may overtake Japan and become third major economic power within 10 years.
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