INDIAN ECONOMY

Indian economic development largely depends on rural economy.

Infrastructure development is an aspect of the Indian economy that is
crying for immediate attention. Indian economic programmes call for
balance between socialism and capitalism as defined in Mixed
Economy by the first Prime Minister of India, Shree Jawaharlal Nehru.
Mixed Economy is a contribution of India to the world as was Neutrality
or Non-Aligned Movement in world politics.

Schemes like free mid-day meals to students in Government

Schools that was first introduced in India for the benefit of the children
of the lower income groups of the society by popular film-star turned
politician and former Chief Minister of the southern state of Tamil
Nadu, Shree M.G. Ramachandran, are gaining popularity throughout
India and are being adopted by increasing number of states through
the length and breadth of India with the active financial support and
encouragement of the Central Government. The scheme is gradually
expanded with the passage of time to higher age groups of the
students to cover more students under the scheme.

India of late is also resorting to reduction in custom and excise

duties to encourage trade and industry while increase in taxes on
undesirable items like tobacco products and alcohol is the ruling trend.
Rationalisation of taxes including income tax and customs and excise
duties covering reduction in their rates is injecting new life to the
Indian economy.

The Indian government budgeted to spend about ten trillion

rupees in 2009-2010, about three trillion more than the previous year
amounting to an annual rise of about 43% in expenditure in contrast to
the rise in revenue only at about 2%, thus giving way for deficit
financing that inevitably leads to fiscal deficit. Allotment of liberal
funds to the National Rural Employment Guarantee (NREG) scheme in
the budget is a laudable effort to improve the lot of the rural poor of
India. Even though children make up to 40% of the population of India,
they are given 11% allotment in the budget of 2009-2010. They should
have been given better attention.

Privatization of the public sector industries is the theme of the

Indian Government from some years after it ventured into liberalization
in economy. This resulted in a large number of its stakes in different
public sector companies being sold out. This massive privatization was
though questioned in the court of law, the Supreme Court did not stop
it as it decided that it does not have jurisdiction in this sphere.

While the oil requirement of the United States of America will

increase by 46% in the next ten years and of China by about 96%,
India’s requirements will go up by about 132%. This is certainly a
mammoth increase. India must find additional sources for oil within
and outside the country apart from discovering other sources of energy
as alternative to the oil. India will find itself in great problems in
coming days unless it does not act fast. Further, increase in oil prices
world over may find India in deep quicksand. India has only two
options: either it will go down by inaction or it will claw its way up by a
concerted action plan.

Value Added Tax is a new phenomenon introduced in India’s

economic scene and commercial field a few years back to replace the
sale tax. Though most States and Union Territories accepted the
regimen, a few are yet to come round to the novel taxing system.
 Employment in India is certainly in a very dismal situation. This is
because nearly a quarter of a million jobs have been lost in India over
the last few months due to the economic crisis that has struck the
world. This is not at all a healthy development for India and this is
some thing that the Government of India has been trying to overcome.

CONSOLIDATION OF BANKS

Bank consolidation is something that has become common now

in the vocabulary of many financial experts. Experts in India believe
that consolidation is the ‘in’ thing right now in the wake of the severe
economic crisis that has hit the world rather hard right now. People
believe that if banks merge and form bigger banks, then the whole
system will be able to face the economic uncertainties better.

In India, the UPA government was all for it in its previous term. It
was loudly thinking about this from the beginning. However, all in all, it
did not do much about the whole affair then as its hands were tied by
its close links with and support of the Left wing parties. However, it
looks as if it will do something about this time, as it is free of
constraints of the first innings in the second term.

Since the monkey is truly off the UPA’s back this time and it is
thus capable of following its own policies, things may turn really well
this time around. Its previous term saw only one event with respect to
banks namely the takeover of the Bank of Saurashtra by the State
Bank of India.
 This was seen as the first step at the time in the catalogue of the
UPA to do something big in the banking sector. However, the
Government did not follow this up with other acts and thus no great
changes were affected in the Indian economic sector last time. Protests
by the staff of the subsidiary banks against merger with the SBI were
also responsible for this inaction at the time. However, it looks as if
some changes may take place this time around and the UPA
Government will bring some concrete changes this time in the
economic front of India.

DISINVESTMENT

Disinvestments is something that Indians have been looking up

to with interest right. It looks to be the right thing to do right now with
the economic recession that is on the rampage right now in the world.
This is something that almost all investors have looked at and are
trying to benefit out of it. However, many economic experts believe
that economic recession is not the right time for disinvestment.

Disinvestment, say experts, is something that must absolutely

not be carried out at this time. While investors are busy selling their
shares, disinvestment will burden the economy and the market and
that may lead to slump in demand and bearish tendencies.
Disinvestment on a large scale will result in the whole system falling
down rather heavily.

To avoid such consequences, investors need to practice

monetary discipline involving restraint, foresight and assessment of
the market before borrowing for investment. They must accumulate
debts with foresight. But, this is not the case with most of the investors
and borrowers. Their greed lead to their own interests at the cost of
others and this attitude leads to the fall of the whole economic system
for nobody’s gain.

An alternative option is issuance of bonds by the companies

rather than resorting to the disinvestment. But, this is too costly a
method to be viable. There have been other proposals that the
government will have to lessen its holdings in various companies from
51% to 33.3%. However, it is doubtful whether the government would
even consider this, as it would weaken its stake in the respective
companies.

AIR INDIA’S CURRENT PROBLEMS

Air India has got itself into quite a big mess by the economic
recession. With the economic crisis that has shaken the world from
head to toe over the last few years, it has been quite a roller coaster
ride for Air India. Air India faces what has been called as the biggest
crisis in its history. Whether it will survive the crisis is a big question
mark. In order to some how improve the situation, Air India merged
with the Indian Airlines, the domestic carrier, to decrease the overhead
expenditures. But, to no avail.

There is concern that many employees of Air India may be

thrown over board and that the salaries of others may also be reduced.
This is causing concern among the employees, as it is not easy to find
and ferret out jobs in the wake of the economic crisis. However, the
Government feels that this economic crisis can be ridden through to its
end and advice employees not to panic and agitate as strikes and
demonstration only keep passengers further away from the airlines
and further deteriorate the situation. The government of India is trying
to keep the situation stable so that Air India will be able to fly high in
the sky in the end.

MONSOON

Rain is needed in India. India is a country of farmers. These

farmers need water for their crops. The main source of water for the
farmers in India is rain. The rain comes mainly in the Monsoon season
and the farmers’ crop patterns are designed according to the monsoon
patterns of a region. The life of farmers depends on the yearly
incidence of the monsoon rains. Monsoon is the deciding season of the
farmers as their livelihood till the next monsoon depends on it.
Farmers looking up at the skies to gauge when the rain would pour are
a symbol of India’s economic uncertainties as well as the pathetic
dependence of India’s farmers on the uncertainties of the monsoon.
Indian Meteorological Department has a history of predicting normal
monsoon with adequate rain year after year. But, as a rule it proves
right only as exceptions. This throws a huge question mark on the
credibility of the Meteorological Department.

Monsoon plays a very important role in the Indian agriculture. As

the monsoon plays a very important role in Indian agriculture, it looks
as if the monsoon plays a very important role in the Indian economy.
India, an up-and-coming country depending upon a variable event like
inconsistent monsoon is not a healthy development.

Indian economy suffering by the irregularity of the monsoon is a

common feature of the Indian life. Shortage of food and farm
production while monsoon is thin or late and destruction while comes
with a vengeance or when it is not needed create havoc to Indian
farmers. Sixty percent of the Indian economy is comprised of
agriculture. Now almost Sixty percent of the Indian agriculture depends
upon the monsoon. Thus, the Indian government faces a very huge
problem every time that the monsoon does not come or is late.

Scientists have laid out a four-pronged scheme to attack the

problem. The first is that the Indian government must encourage the
growth of drought-resistant crops or crops that are genetically
modified so as to survive harsher climates. Another thing is to replace
the existing crops with these new types of crops. Another very
important measure is to conserve the environment and the natural
resources, which are of course very important for crops and without
which crops will be in a real stew. The last prong in this pitchfork is
that the farmers must use new forms of harvesting and also new types
of fertilizers or manure. This is of utmost important. Another important
thing will be to decrease the pollution levels.

FOOD SECURITY

For centuries people in India have suffered from lack of food.

Even though the huge famines, which killed a very large number of
individuals and caused a large amount of suffering now belongs to the
past, there is still hunger in India. This hunger is omnipresent and looks
to be irremovable from the country. Even now because of lack of food,
children are born malformed or are mentally challenged.

This is mainly seen among the poorest of the poor, the people
who form the lowest strata of India’s society. These people are mostly
seen in tribes. Some of these whole tribes suffer from lack of food. This
is not some thing new in India. In India throughout the ages, one can
see great famines, which killed a very large amount of people and
have thus reduced the population of India quite a lot.
 These famines were all very horrendous. However, the Indian
government has taken it upon itself that it must somehow end this. It
has decided that it will some how make sure that every person in India
will be able to avail him or herself to some food.

This is a big undertaking and challenge and people have to work

hard to make this come true. This will require the whole government’s
concerted efforts and involve all the arms of the government it can
muster. This will be following the footsteps of the Lula de Silva
government of Brazil, which did something very similar and christened
it ‘Zero Hunger’. The Indian government hopes to do some thing of this
sort, as this ‘Zero Hunger’ scheme was successful in Brazil.

The government has already put forward a scheme in which the

‘poor people’, who by its rather astonishing definition encompasses an
extremely low percentage of the population, will be sold 25 kilograms
of wheat at three rupees each, every month. In the circumstances of
many millions of people in India under the poverty line, actually one-
fifth of them, are already under the scheme of receiving 35 kgs of rice
at Rs. 2 each, these people will thereafter receive only 25 kgs at Rs. 2.
Therefore, the new scheme appears inadequate and retrograde in
some respect.