List of macro-economic problems of Indian economy and comment on them in brief
Macroeconomics is the branch of economics which is mainly focused on the movement and trends in the economy. However, the economy still faces various problems and challenges which are listed below:
Regardless of rapid economic development, unemployment is still a burning issue in both rural and urban sectors. Increasing rate of economic growth has left behind unskilled workers, and they are struggling to find suitable work in growing industries.
2. Poor educational standards
Although our country is benefited with a good percentage of English speaking citizens, still there is high level of illiteracy amongst the masses. Worst case is in rural areas and amongst women population.
3. Poor Infrastructure
Many Indian citizens lack simple facilities like absence of safe drinking water. Because of bureaucracy and inefficiency, public services are creaking. Every day, more than forty percent of fruit and vegetable gets rotten before they reaches the market
4. Balance of Payments deterioration.
Even if today India has created large volumes of foreign currency reserves, the high rates of economic growth have been at the cost of a stubborn current account deficit. Current account reached a peak of 6% of GDP in the year 2012 as per data.
5. High levels of private debt
Lifted by the recent property boom, the amount of lending in India has grown by 30%. But there are fears about the risk of such loans. Besides, RBI could be forced to increase interest rates, on condition that inflation increases further.
6. Inequality has risen rather than decreased.
We thought economic growth will help dragging the Indian poor above the poverty line. But, so far we have witness economic growth has been highly uneven. It is only benefiting the skilled and wealthy disproportionately.
7. Large Budget Deficit
In this developing world, India has one of the largest budget deficits. If we exclude subsidies, it amounts to nearly 8% of overall GDP. Even though we see trend that it is fallen a little in the past year. It is allowing slight scope for increasing investment in public services like health and education.
8. Rigid labour Laws
Because of stringent labour laws, it is quite difficult to boost economic growth. For example, without any government go-ahead, those production firms who employ more than 100 people cannot even fire workers.
9. Inefficient agriculture
We have more than 51% of the work force employed in agriculture, but it only produces 17.4% of economic output. This is the most inefficient sector of the economy and reform has proved very slow.
10. Poor tax collection rates.
As per the data provided by Economist, India is being one of the poorest country in terms of GDP rates in the whole world. India’s tax revenue percentage is just 12% compared to an EU average of 45%. This reflects extensive corruption, avoiding tax and complex tax rates.
11. Business difficulties
According to the World Bank data, the ease of doing any business in India is very pitiable. India ranks 130th rank out of total 190 countries. Big concerns for companies include in business has to face no ease of enforcing contracts, dealing with construction contracts is difficult, trading across bordering countries, etc.
12. Inequality within regions
There are huge differences between different regions in our country. Economic growth has benefitted some regions more than others. Technological hubs, such as Delhi, Bangalore, Gurgaon, Mumbai, and Chennai have attracted higher paying jobs.