Wealth and welfare are two side of one coin. explain its impact on Indian economy.
Answers
Explanation:
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements.
Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.
The first thing that any student of economics learns in a Basic Microeconomics class is that individuals always try to maximize their satisfaction, whether be it in the present or in the future.
Attributing such a selfish quality to every person leads to a conclusion that we humans will never act if the benefits are not immediate and tangible. No wonder climate change has become such a major problem and has led to serious debate between the economists and the environmentalists. Some economists aggressively suggest that undue focus on preserving nature will lead to a considerable fall in the growth rates of economic development.
It is only with the help of greater innovation emerging from economic activities, can the environment be protected. It is only through an abundant supply of clean and efficient energy and renewable resources, can the economic growth be maximized and sustained.
Extrapolating this argument to the Indian context leads to only one conclusion. Acting on climate change now will lead to greater economic progress in the future. India is the seventh-largest economy in the world today in spite of abject poverty, high levels of unemployment, lopsided development and deteriorated levels of the environment.
The two things that are pulling us back are the lacking impetus from the policy angle and a constructive people’s movement that can influence political leadership.
India has always been a follower when it comes to adopting economic models and new technology. In this new age of consequences, climate change has now offered our country a chance to lead by example by facilitating proactive innovation for creating models of sustainable development.
The nation which leads in building sustainable business will surely lead the economic growth in the future. For this, economic models need to aggressively start monitoring externalities at the broader level and get ‘Pigouvian taxes’ in to the picture to account for them.
However, accounting for economic growth without incorporating the role of the political sphere is indeed futile. Hence, the governance systems in the country need to include the reality of global warming as an essential part of budgeting and legislative reforms.
The UN Sustainable Development Goals (SDG), can be adopted as an agenda by every local government in the country. It can further solve maximum social as well as environmental problems and ensure economic prosperity.
On the energy front, coal and oil are increasingly becoming unprofitable and are relying on subsidy from the government. Renewable Energy (RE) has become cheaper over the years and is cost-competitive as opposed to fossil-fuel.
Creative destruction has been the basis for development since time immemorial, and it is time that India accepts thermal energy as an obsolete form of energy generation. Renewable Energy is the only way forward and it is high time that we invest the money spent on coal subsidies, in making Renewable Energy widespread and abundant.
Renewable Energy must become the new ‘Oil’ for the future.
Today, India faces several direct challenges when it comes to climate change. It is thus not only in the interest of the government but also the people, to shift to a low carbon lifestyle. It is time to invest in a new and combined approach of climate action and economics to ensure sustainable economic success of our systems.
Many nations have recognized this truth and have already declared constructive policies both for the economy and towards climate change. The old growth model based on fossil fuels and pollution is out of date and out of touch with our planet’s needs. We in India must wake-up to the new realities and take bold steps to utilize this unique opportunity. 21st century must be remembered as the one that saved humanity rather than the one which destroyed it, and we all need to work towards that.