Need for Economic Reforms 2.0

Mains Marks Booster     5th August 2023        

The Indian economy has faced a slowdown since the early 2010s, further aggravated by the COVID-19 pandemic. Achieving the goal of a $5 trillion economy by 2025 necessitates further economic reforms.

Key Reforms for Achieving the Target

  • Simplify and Streamline the Tax System: India ranks 115th out of 190 countries in the ease of paying taxes, according to the World Bank's Ease of Doing Business Report 2022.
  • Boost Manufacturing: Efforts should be made to increase the share of manufacturing in GDP, which currently lags behind other major economies.
  • Increase Foreign Investment: India should strive to improve its attractiveness to foreign investors by creating a conducive investment environment.
  • Encourage Entrepreneurship: Efforts should be made to address the challenges faced by entrepreneurs in starting and scaling businesses.
  • Increase Agricultural Productivity: India's agriculture sector has untapped potential that needs to be harnessed.
  • Invest in Education and Skills: India's human capital quality ranks 116th out of 174 countries, according to the World Economic Forum's Human Capital Index 2020.
  • Promote Exports: India's export performance needs to be enhanced to remain competitive in the global market.

Target of $5 Trillion Economy by 2025

The goal of achieving a $5 trillion economy by 2025 was set by the Government of India to propel the country's economic growth. To reach this target, several areas of focus have been identified:

  • Infrastructure Development: Massive investments in infrastructure are planned to create employment opportunities, attract foreign investment, and improve productivity.
  • Digital Transformation: Promoting digitalization across sectors can drive innovation, improve efficiency, and create new business opportunities.
  • Skill Development: Skilling programs aim to create a skilled workforce capable of meeting industry demands and contributing to economic growth.
  • Promoting Entrepreneurship: Support for entrepreneurs through access to funding, mentorship, and resources can foster innovation and create new business ventures.
  • Ease of Doing Business: Simplifying regulations, reducing bureaucratic hurdles, and streamlining processes to improve the ease of doing business in India.

Schemes Launched by the Government

The Government of India has implemented several economic programs to promote growth, development, and social welfare. Some notable programs include:

  • Make in India: Launched in 2014 to promote manufacturing and attract foreign investment.
  • Digital India: Launched in 2015 to transform India into a digitally empowered society and knowledge economy.
  • Skill India: Launched in 2015 to provide skill training and vocational education to the youth.
  • Pradhan Mantri Jan Dhan Yojana: Launched in 2014 to promote financial inclusion and provide banking services to all.
  • Atmanirbhar Bharat Abhiyan: Launched in 2020 to promote self-reliance and self-sufficiency in various sectors.

While achieving the $5 trillion economy target is challenging, the government continues to implement reforms and measures to boost economic growth and development in India.

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