Advantages of economic reforms in india
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Introduction of current economic reforms in India initiated process of structural adjustments in order to correct the distortions and weakness of economic policies followed in the country since its inception of economic planning. The advocates of current economic reforms has justified such process of structural adjustments.
The following are some of the important arguments advanced in favour of economic reforms:
1. In India wage fixation has no link with productivity. But rationality suggests that wages must be equal to marginal productivity of labour. Labour market in India is having dual character, representing organized labourers enjoying security and high wages and unorganized workers, on the other hand, which remained exploited, totally defenceless and poor. Thus in this context, economic reforms through its market mechanism will either improve productivity of workers or face closure or exit by the employer concerned.
2. The public sector enterprises in India are facing the problem of low productivity and poor rates of return due to high overhead costs; overstaffing, wastage of raw materials and inputs, wrong pricing policies and loss of work culture among highly unionized workers. In order to make necessary remedy to these problems of PSEs, economic reforms will play a very important role.
3. The country is facing a huge growth of non-plan expenditure, particularly due to its ever increasing expenditure on defence, subsidies and interest payment. The current economic reforms have made an attempt to reduce this increasing trend in non-plan expenditure through withdrawal of subsidies of food, fertilizers, exports and even on higher education.
hope it helps you....
The following are some of the important arguments advanced in favour of economic reforms:
1. In India wage fixation has no link with productivity. But rationality suggests that wages must be equal to marginal productivity of labour. Labour market in India is having dual character, representing organized labourers enjoying security and high wages and unorganized workers, on the other hand, which remained exploited, totally defenceless and poor. Thus in this context, economic reforms through its market mechanism will either improve productivity of workers or face closure or exit by the employer concerned.
2. The public sector enterprises in India are facing the problem of low productivity and poor rates of return due to high overhead costs; overstaffing, wastage of raw materials and inputs, wrong pricing policies and loss of work culture among highly unionized workers. In order to make necessary remedy to these problems of PSEs, economic reforms will play a very important role.
3. The country is facing a huge growth of non-plan expenditure, particularly due to its ever increasing expenditure on defence, subsidies and interest payment. The current economic reforms have made an attempt to reduce this increasing trend in non-plan expenditure through withdrawal of subsidies of food, fertilizers, exports and even on higher education.
hope it helps you....
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