India’s economic challenges
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The runaway inflation, rising unemployment, mounting current account deficit etc. have exacerbated the challenges facing our economy, and some deft management is required to keep the Indian economy on track. The disastrous situation Sri Lanka and Pakistan are facing today due to economic constraints has prompted some experts that India may also face the same crisis. But they forget that, India’s economy is far more robust than these two nations and resilient. Still, the reality is very disgusting for India. Poverty has risen to unacceptable levels; eighty-one crore persons, that is around sixty per cent of our population are surviving on subsidized rations provided by the Government and demand for employment under the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) is surging. Not only poor, but middle class persons can be seen standing in queues for grains distributed under PDS. Then, the economy has failed to keep pace with our famed demographic dividend, resulting in large scale unemployment. Prime minister Modi always talk about demographic dividend but now it has been proved to be a burden rather an asset. According to Centre for Monitoring the Indian Economy (CMIE) data India’s employment rate was only thirty five point eight per cent in June 2022, meaning that only thirty five point eight per cent of the working age population in India were employed. With this waste of human resources, it is not surprising that we as a country are far from realizing our full potential. According to the CMIE report, the government shrunk the demand for armed personnel and opportunities in private equity funded new-world jobs also started to shrink. It concluded that, the economy needs to grow much faster to solve the employment problem. Thirdly, rampant inflation above seven per cent for the last six months has spoilt the budget of poor households. Price rise is more pronounced in food prices; as an amelioratory measure the Government is planning to lessen the weight of food items in the Consumer Price Index (CPI), so that CPI does not rise as fast when food prices go up. Hunger is increasing in India though not to serious level. Fourthly, due to costlier petrol and higher imports of gold, the trade deficit ballooned to $seventy point twenty five billion in the first quarter of the current year.. Consequently, forex reserves are going down, with the dollar-rupee exchange rate nearing 80 ~ a more than 8 per cent fall in the last one year. This was the exact reason due to which Sri Lanka has sunk and Pakistan in on the way of sinking. Much of the Government’s spending is financed by borrowings; total debt of the Government had increased from Rs 58.66 lakh crore in 2014-15 to Rs 139 lakh crore in 2021-22. This is definitely a matter which will give policy makers sleepless nights. Yet, seemingly unaware of lurking dangers, current public discourse in India is least focused on economic issues, except for the Government pointing out random achievements to show how the country had progressed in the last eight years. In any country like India, economic issues always take a back seat in comparison with political and religious issues. Economic literacy is very low in our country which is main impediment in getting good suggestions to drag our economy from danger. The much-vaunted financial stimulus of Rs twenty lakh crore, given during the pandemic, comprised mostly concessional credit and loan moratoriums. It did not prove to be useful for giving small industries stimulus they required during the pandemic years. Many small businesses went under because they could not repay the loans taken during pandemic times. Agriculture is the only sector which was working n pandemic period. But as the pandemic is over, we have neglected the sector and as earlier, turned our eyes to only big businesses. We have always failed to recognize true potential of agriculture. If we overcome these challenges, we will not have fear of becoming another Sri Lanka or Pakistan.