Every society faces this economic problem which is the problem of how to make the best use of the limited and scarce resources. The economic problem does exist. The problems are there as the needs and wants of people are endless, while the resources available to satisfy their needs and wants are limited.
In our next section, we will know about the three main problems of an economy. Like other economies, India being a developing economy faces the same problems. Added to these are the social challenges which the nation has to go through while dealing with the growth.
(Image will be Uploaded soon)
Three Main Economic Problems
What to Produce?
The Societies decide the best combination of goods and services which meet their varied wants and their needs.
How to Produce?
The Societies also need to decide the best combination of the factors which will create the desired output for the goods and services.
For Whom to Produce?
The final question is, for whom to produce? Societies need to decide the section of people who will benefit from the output from the economic activity, and how much will they get is another question. This is often called the ‘Problem of Distribution’.
Current Economic Issues in India
With the stagnated growth of demand, this seems to be the biggest challenge for the economy at the current moment. Demand for important goods and commodities like fuel, food, consumer goods, and power has fallen over the last few months.
While India’s demand woes began in the year 2019, the outbreak of coronavirus worsened the scenario. The consumer demand of India is declining as for the low household incomes caused due to the major job losses in the wake of this raging pandemic which has forced closures of the factories and businesses.
Rise of Unemployment
The latest unemployment figures, released by the Centre for Monitoring Indian Economy (CMIE), are evidence of this economic weakness. The CMIE data show that about five million or 50 lakh salaried jobs were lost in the month of July, with total layoffs in the formal sector to over 1.8 crores.
Rising Coronavirus Cases
There is the view that India will face the impossibility to tackle the economic crisis unless it manages to bring the Covid-19 situation under control in the country. India went for a strict lockdown on March 25 and decided to gradually have her un-lockdown phases.
Economic Challenges in India
India is a new country when we talk about the economy. It came out of colonial rule of the UK which left India as the poorest of the countries. After independence we as a country are still learning and trying our best to bring our country and its economy to a better place. But there are a lot of challenges in our way to achieve it. Let us have a look and discuss those challenges we face as a country in the path of economic development.
The first issue is the huge disparity in economic standard of the citizens in the country. Historically India was divided into a caste system where a certain section of society was able to gather most of the economy and resources with them for a long time. With time this became a cycle of recursion and the wealth accumulated in the segment out of the reach of many. After independence efforts were made where the resources redistribution were attempted and completed to some extent. After independence also the accumulation of wealth continued and has been mostly with the government officials and politicians. The matter of fact is money creates money. So the disparity will keep on increasing. According to a recent survey 57% of countries' wealth is within the top 10% of the population. This disparity prevents us from growing further as the lower half of the population don't have the basic infrastructure or facilities to pace themselves for a world we are currently leaving.
The second issue we have is our education and education policy. We have been continuing education from colonial rule where the main aim of the education was to create people who can work for the British government in administration. We lack to create curiosity in students, we lack in providing an experimental environment where they can explore their interest. It causes them to be interested in government jobs. After they finish education they don't want to be entrepreneurs. These attitudes prevent India from being economically self-sufficient.
Third Issue with India is the weak infrastructure. With the infrastructure we have in the country, industrial development is not easily possible. With the less production of goods India is still highly dependent on imports to meet our needs. The less production means less jobs and less economic prosperity of the country.
There are far more challenges to India's economic development but these could be the first one's we start with to resolve.