Question

8. Despite of being five year plans Indian economy still suffers from various
problems since independence. List some of them and give reason for their
presence?(4)​

Answer 1

The reasons are given below.

Explanation:

• India is an under developing country.
• In recent decades, India is trying hard to bring its economy to a stable state.
• For this purpose, India has also launched five years plan to deal with the economic problems.
• The reason are poor infrastructure.
• Bad political planning and influence on the people.
• Collaborations with private businesses and implementation of business-friendly reforms.
• Coordination with the former governor.

Answer 2

Despite of being five year plans Indian economy still suffers from various problems since independence

Explanation:

• Unemployment remains a concern in both rural and urban areas amid strong economic development. The high growth rate left unskilled workers behind who is struggling to find jobs in growing sectors. With, minimal or little state welfare, this leads to extreme deprivation for the unemployed.
• Although India has benefited from a high percentage of English speakers, there are still high rates of illiteracy  amongst the population. In rural areas & amongst women this problem s worse. Over 50 percent of Indian women are "illiterate". This restricts economic growth & a skilled workforce.
• Many Indians do not have access to basic facilities like drinking water. Indian public services  and infrastructure are crumbling under the burden of bureaucracy & inefficiency.
• Although India has accumulated large sums of "foreign exchange reserves", a persistent "current-account deficit" has been the result of high rates of economic growth. Although the current account has improved, imports have risen faster than exports for the Indian economy. In order to finance the deficit, India needs to attract capital flows. The high deficit also caused the Rupee depreciation, especially from 2012 to 2014. While the deficit remains, the fear of an additional devaluation of the Rupee is always present. The economy has to be re-balanced and the profitability of exports strengthened.
• The amount of credit in India increased 30% in the past year as a result of a property  boom. there are concerns about the risk of such loans. It could be problematic if they are dependent on rising property prices. In addition, the RBI could increase interest rates by increasing inflation further. As interest rates increase significantly, these indebted persons will face rising interest payments and may in future reduce consumer spending.
• Economic prosperity is expected to help get the poor Indians beyond the poverty line. Till date, however, economic growth has been "highly uneven" which is benefiting only wealthy & the skilled disproportionately. Most rural poor communities in India still do not reap direct benefits from economic development in India. There is no power in over 78 million households. 33% (268 million) of the population earns less than 1$ per day even today. Moreover, the disparity between the rich & poor in Indian villages is widening among the poor.
• In the developing world , India has one of the biggest budget deficits. It contributes to almost 8% of GDP, minus subsidies. While in the past year it fell a bit. This gives little scope for increased spending in health and education programs.
• Organizations of over 100 people can not fire workers without permission from the government, for example. It prohibits businesses from increasing to more than 100 employees. This deters funding from abroad. Trade unions are a big political force base and policymakers are often scared of changing highly controversial labour legislation.
• Agriculture provides 17.4 per cent of the economic production but in agriculture more than 51 per cent of the population is employed. It is the economic field that is the most inefficient, and progress has been very slow
• According to the "World Bank (WB)", the "ease of doing business" in India is "poor". India ranks "130/190". Big problems for companies comprise ease of "enforcing contracts", "dealing with construction" contract, paying taxe, & trading  across border
• Some regions have gained more than others from India's economic growth. Technological centres like Mumbai, Bengaluru, Delhi, Hyderabad, etc have drawn higher-paying employment. This has caused the inflow of most mobile & skilled workers, causing a congestion in these supercities but not addressing rural poverty in particular in the northeast.

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