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Sunday, January 24, 2016

Impact of Agricultural, Industrial and Environmental Policy on Indian Economy

Economic policies drive the pace of economic growth if they are amendable based on the changing economic scenario. The Government of India would need to implement major policy initiatives over the current decade in the following broad groups:

Agriculture policies

Agriculture is the major source of income of the Indian population. But the sector needs new policy initiatives for stimulating growth and enhancing efficiency as it is lagging behind. The Agriculture Products Marketing Committee (APMC) Act in 2003 intends to transform India’s agricultural marketing system, boost farm income, eliminate intermediaries to increase income levels of farmers and reduce the role of the state in marketing. It needs certain amendments such as setting up direct purchasing centres, allowing contract farming and establishment of private as well as consumer and farmer markets. The state government’s thrust on educating and training farmers will help improve their skills and develop the agriculture sector.

The government will follow the direct cash transfer system for disbursal of subsidy for people living below the poverty line. This will reduce black marketing, adulteration, and hoarding, facilitate a more efficient distribution system, and also enable that the subsidy reaches the intended people. One of the major challenges is identifying the targeted beneficiaries as there is lack of identification. A task force has been set-up to work out a robust plan to effectively merge the new system with the exiting one. Moreover, the state governments should be actively involved to enable effective distribution.

Industrial Policy

To achieve a sustained high growth path, India needs to further strengthen its industrial base. The population of the working age group (15-59 years) is expected to rise to 64.2% by 2020. India needs to generate employment opportunities through rapid development in the manufacturing sector. The policy initiatives undertaken by the government such as land acquisition policy, facilitating FDI in India and ‘Make in India’ campaign bodes well for the industrial sector development. 

Steps have already been taken to improve the investment environment in the country, but only a few states have incorporated the system of single window clearances to enhance transparency and speedy processing. The approvals and clearances can be received from different agencies by filing a common application form, not from various departments or board or statutory authorities, and the entire process will be time-bound. Andhra Pradesh was the first to implement it and various other states such as Gujarat, Karnataka, Orissa and Maharashtra followed suit.

The government has taken numerous initiatives to boost revenue and justify expenditure. The introduction of the GST, which seeks to combine indirect taxes levied by the state with those levied by the central government, is expected to result in a gain of 0.9-1.7% in India’s GDP by improving economic efficiency. 

Environment Policies

Lately, there is an increase in concern regarding environmental degradation and the governments, industrialists and various other organizations have realized the importance of a healthy ecosystem for a sound and secure livelihood and sustainable economic development. The government should formulate effective stringent norms to reduce environmental degradation and encourage the use of environment-friendly machinery by providing incentives and tax reliefs, in an effort to achieve the aim of sustainable development. The Government needs to stipulate a frequent and realistic emission norm along with devising measures such as ‘Carbon Tax’ on coal, to enhance environmental protection. 

The funds collected through ‘Carbon Tax’, at the rate of र 50/tonne, is diverted to ‘National Clean Energy Fund’; to meet the requirements of funding research for innovative products in clean energy technologies and remedial programmes for environmental problems. The government has also enhanced the criteria of reduction of emission and the industries now have to have a high level of efficiency. The government needs to provide incentives to industries to enable them to afford the high cost equipment, in order to enhance productivity and reduce pollution.

As a very rapidly growing economy which is next only to China, India should play a critical role in various international United Nations organisations. It has the manpower, resources, and technology to address any and all issues and challenges confronting the developing world. 

India suffers from numerous setbacks such as bureaucracy, red-tapism, corruption, acceptance of this corruption by the society and abuse of political power. Given such a shoddy state of affairs, merely suggesting a set of technical solutions is unreasonable as any or all of these social constraints can affect the implementation of policies. Hence, there is an urgent need of formulating preventive strategies, specialised courts to tackle environment issues, and transforming the public/private sector industries so as to administer transparency and a consequent adequate operational system. Moreover, the public needs to have greater participation to help realise societal conditions that cause hindrances. We’re taking longer to get done what needs to be done.

India has to overcome a lot of issues, if it has to attain Late Dr APJ Abdul Kalam’s vision of India becoming a developed country by 2020. Time will only say what future has in store for the Indian economy but as of now it’s on the right track.


This blog post is inspired by the blogging marathon hosted on IndiBlogger for the launch of the #Fantastico Zica from Tata Motors. You can  apply for a test drive of the hatchback Zica today.

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