India needs a new economic policy
Source: The Hindu
For Prelims: Monetary Policy Committee (MPC), GDP, National Statistical Office(NSO)
For Mains: New Economic Policy, Monetary Policy Framework
Context:
The National Statistical Office (NSO) has released the 2022-23 GDP fourth-quarter growth rate figures. Measured against fourth-quarter figures of the previous year, the data give a gloomier picture than what the media publications of the Press Information Bureau present. According to NSO data, in the first COVID-19 pandemic quarter of 2020-21, i.e., April 1 to June 30, 2020, GDP growth rate was minus 23.8% when compared to GDP of the same period in 2019-20
Highlights of the Article:
COVID-19 Impact on Economy
Goods Service Tax (GST)
Annual Growth
New Economic policy
Liberalisation Privatisation Globalisation
UPSC EXAM NOTES ANALYSIS:
1.Highlights of the Report
- Three conclusions based on NSO data since 2014-2015 are important for a reality check. First, the growth rate of GDP, since 2015-16 had been declining annually, and has fallen in the fourth quarter to what it was earlier, and sneeringly referred to by economists as “The Hindu Rate of Growth” — 3.5% growth rate in GDP
- The Gross Value Added (GVA) in the economy is reckoned to have risen 7% in 2022-23, compared to 8.8% in 2021-22, with manufacturing GVA growth sliding to just 1.3% from 11.1% a year ago, despite a 4.5% rebound in the final quarter after six months of contraction
- The farm and services sector buoyed economic outcomes as just three of eight broad economic activity segments recorded a higher GVA growth than in 2021-22
- The NSO also revised GDP and GVA numbers lower for the first half of last year, but bumped up the third quarter figures slightly.
- The first quarter’s GDP growth in 2022-23 is now pegged at 13.1%, followed by a 6.2% rise in the second quarter and 4.5% growth in the third, up from the 4.4% estimated in February.
2.COVID- 19 Impact
- The COVID-19 pandemic has had a devastating impact on the Indian economy. The economy contracted by 23.9% in the first quarter of 2020-21, the worst quarterly performance since independence.
- The economy shrank by 7.3% in 2020-21, the worst annual performance since 1979-80
- The pandemic has affected all sectors of the Indian economy, but some sectors have been hit harder than others.
- The tourism, hospitality, and transportation sectors have been particularly hard hit, as have the informal sectors such as agriculture and retail.
- The manufacturing sector has also been affected, as has the IT sector, which has seen a decline in demand for services.
- The pandemic has also had a significant impact on employment in India. The unemployment rate rose to 23.5% in April 2020, the highest level since 1972.
- The unemployment rate has since declined, but it is still at a high level of 7.1% in February 2023.
3.Key Areas to be addressed
India needs a comprehensive economic policy that addresses the following key areas:
- Infrastructure: India needs to invest heavily in its infrastructure, including roads, railways, airports, and ports. This will improve connectivity and reduce logistics costs, which will make it easier for businesses to operate and compete in the global economy.
- Education and skills: India needs to improve its education and skills system to produce a workforce that is equipped for the jobs of the 21st century. This includes investing in early childhood education, vocational training, and higher education.
- Ease of doing business: India needs to make it easier for businesses to start and operate in the country. This includes streamlining regulations, reducing bureaucracy, and providing better access to finance.
- Innovation: India needs to foster a culture of innovation and entrepreneurship. This includes investing in research and development, providing tax breaks for start-ups, and creating a more conducive environment for innovation.
- Sustainability: India needs to develop its economy in a sustainable way. This includes investing in renewable energy, improving energy efficiency, and reducing pollution.
4. Conclusion
Developing an effective economic policy for India requires careful consideration of its unique challenges, opportunities, and development priorities. The process should be transparent, inclusive, and responsive to the needs of the country's diverse population
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