Skip to main content

Structural Reforms

Reforms 
By Arpit Sharma
Present scenario implies that India is going through an economic slowdown. Country’s GDP growth is the slowest in the last 11 years, there is a huge burden of NPA’s on the banks. India is sitting on a huge pile of Fiscal Deficit. Inflation is also high, and the trend is of smart investment and divestment.
The reasons behind these problems are more or less same i.e. the structural changes which happened due to GST and demonetisation. Citizens need to understand that economic reforms take time to show its positive effects. If during 1991, our Finance Minister Dr. Manmohan Singh wouldn’t have introduced the policy of Liberalisation, Privatisation and Globalisation, wouldn’t have opened our economy for private sector to enter then our economy wouldn’t have survived and grown. In the same way GST is the need of the hour.
GST in a way has brought federalism in the country. If we look at the major problems in our country like problem of roads, electricity, education, healthcare, water supply and purification basically comes under the control of state government. Even though states collectively consume more amount of the government spending as compared to the centre, the issues are still there. Before GST most of the states tried to compete with each other on the basis of a tax cut. For instance if one state used to introduce a tax cut then the other states would try to compete by introducing a larger tax cut which resulted into a deficit. One of the best things that the Modi administration did is the introduction and implementation of the GST, in which all the government revenues gets collected under one pool and then a particular percentage is given to each state. Now after the implementation of GST, no state can introduce a tax cut separately and if states want to introduce a tax cut then it has to go to the GST council where the decision would be taken if 2/3rd of the majority agrees. Now states can compete with each other only on the basis of better infrastructure, education, health, water supply and purification which anyway would lead to a competition for the betterment of the country.
Reforms like GST will obviously take time to show their positive impact even at the cost of a temporary economic slowdown but at the end of the day it is for the betterment of our country, its sustainability and its future.
Labels:

Comments

Post a Comment

Popular posts from this blog

Did somebody see it coming?

Did somebody see it coming? The answer to the above question lies in the history when the bubble busted and to be precise, some of the greatest economists knew but nobody listened to them. Yes, I am talking about one of the biggest financial crises. As we all know that when something is too good to be true, then it usually isn’t! In the late 1990’s, the US economy was booming. This was a period of optimism. Tech companies were in trend and everybody was investing in tech companies. And since the stocks of these tech companies got highly overvalued and the bubble busted. People started withdrawing money from stock market and since the interest rates in banks were very low, the investors were looking for an alternative to invest in. So, guess what will be the next best alternative, yes you got that right! The housing market. Now before going further I would like to ask you a question that if you want to buy a house and the banks are ready to grant you a loan without a down
4 comments
Read more

BLACK THURSDAY

BLACK THURSDAY We remember that the allied powers won the World War - I and USA was a part of the allied powers. After World War - I there was optimism in the US economy and it was all bullish. The industries grew and there was a huge demand for white goods. People were buying more and more. It was because of the policy of USA which was “Buy now pay later” that has put a large chunk of disposable income in the hands of consumers. Since World War 1, the USA government has raised a lot of money from the citizens of USA through bonds. For reference (if you have watched the movie “Captain America-The First Avenger” in that when Steve got his powers and the colonel Chester Phillips didn’t want him to fight in the war so he started doing stage shows, he was basically trying to popularize and sell the US Bonds). As the US bonds were highly liquid and also earned a lot of interest income for the consumers, the consumers were in a habit of buying them. Since the war was ove
3 comments
Read more

Vices

VICES  -by Arpit Sharma Now-a-days the lives of people have become very hectic; being in the office, busy with work till late night has sacrificed their social life. This has given the birth to New-age vices. Vices differ on the basis of time, gender, profession, and the preference of pleasure. Some vices are traditional in nature like alcoholism , smoking, gambling, consumption of drugs, etc. Some of the millenials common vices are having junk food, chocolates and ice candies etc.   Unknowingly, there is a direct relationship of the vices with business i.e. if the number of vices in a person increases, his consumption also increases which actually helps lots of businesses. Most of the businesses in this world are only based on our vices. For instance, the recent tagline of the Pepsi is “THAT’S WHAT I LIKE” which conveys that the company is encouraging customers unapologetically to do what they enjoy. Now doing what a person enjoys is acceptable but
1 comment
Read more