Essay Example on India's Economic Transformation: License Raj to Globalization

Introduction

The state of India has been penetrated by the social actors than many nations of the Southeast and East Asia. The country has demanded of state-driven globalization and state-driven nationalization that has higher command over the interest of groups such as trade unions, farmers and industrialist. Furthermore, Indian economic development was conquered by wide red tape and regulations, state-owned sectors, socialist-influenced policies ad collectively called "License Raj" which made India economy to be isolated from the world economy. India began to open its market to the world through economic liberation, where the policy formed played a vital role in the economic devilment. It is also advisable that India pushes some more impact market reforms to be able to sustain its rates and also achieve the target of the government of about 10%. Hence the paper will discuss critical aspects to the economic development of Indian state.

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The Role of the Market and the State India's Economic Development

The state has a role of making a positive policy framework and legislative environment which will allow various arms of the India state to achieve and explore their goals and potential. Also, maintaining a high standard of the operations to be able to protect the interest of the public. The state controls the consumption, distribution and production of the commodities. These are a measure that will help the stare in reducing social and economic inequalities within the nation. It needs to influence investment level, ensure full employment, control fluctuation, influence resource use and influence income distribution. The state also needs to maintain public services and also control the quality of money. For the state to perform all these functions. The country needs to accomplish two primary tasks that are direct and indirect measures (Suman, 2018).

Direct Measure is where the state will involve itself directly to perform several functions to ensure economic development. These functions include first organizational changes which play a vital role in the industrial development process. It is where the state needs to expand the market size and also the organization of the labour market. It can develop a means of communication and transportation to expand the market size or increase the productivity of the labour by recognizing the labour unions (Suman, 2018). Secondly is the role of the state to provide economic and social overheads to help in economic development in India. Some of these overheads include electricity irrigation, ports, means of communication and transportation, etc. Also, the state needs to provide training and education facilities and even health services that will accelerate the economic development pace.

Thirdly is that the state needs to increase education in the country that will increase the process of economic development. These facilities will increase occupational and geographical mobility, facilitate innovation and raise their productivity and increase the quality of labour that is vital for economic growth. Another direct measure of the state includes maintenance and development of family planning and public health, provide changes in the institutional frameworks, and stepping up of the rate of the investments (Suman, 2018). Furthermore, they provide agricultural and industrial development. For example, by the provision of fertilizers t the farmers, by influencing the use of the resources and removal of inequalities within the state. Also, the sate ensures there is an optimal distribution of resources, balancing of the growth, self-reliance and maintaining security and peace within the rules.

Concerning indirect measure, the state needs out to provide a monetary policy which helps institution and economic development, for example, by raising factors of the production. Secondly is ensuring fiscal policy through changes in expenditure pattern and government revenue. Thirdly is price policy through control and regulating of the prices and also increase in the foreign trade. Lastly is to strength the public sector through social welfare and also improve the economic planning of the states. Likewise, the market also needs to play its part in economic development by ensuring that the law of demand and supply is at equilibrium by directing the services and production of goods (Suman, 2018).

Openness Versus Import Substitution in Trade for India Poverty Reduction and Growth

Trade openness

It is described as the inward or outward orientation of the economy of a nation. It is the measure of the policies of the economy that either invite or restrict trade between the countries. It believes that when a society such as India lacks trade openness, it will slow down the economic growth/ development and will not reduce the poverty rate within the nation. It is because trade openness tends to increase economic growth and development and reduce the country poverty rate. For instant when India country receives aid and loans from governmental organizations and global non-governmental organizations to improve their technology, communication and transportation and infrastructure, it will experience economic growth within the states (Biswas and Sindzingre, 2006). The economic development will further bring government policy which will remove the trade barriers like trade tariffs which will then make Indian trade with other nations more undesirable and less profitable. It will also reduce enterprise taxes which will be less desirable for the firms to operate and build in other country and turn to reduce the poverty level in India. It is because trade openness brings about economic growth in India, and that growth is necessary for poverty reduction. For example, growth brings about diversification, changes in the land reforms and agricultural intensification that assist in reducing the poverty level in India.

Import Substitution

It is economic and trade policy that advocates for the replacement of the imports within a nation with domestic production. It is a strategy that attempts in reducing a foreign country dependency through local production of services and industrialized products. Opponents of trade openness believe that India should implement the plan of the import substitution to shield the domestic products and also boost their production from the international competition through the harnessing of the demographic dividends (Agarwal, 2015). It is an aspect that brings about economic growth within the states through the creation of employment, saving in foreign currencies, which decreases the foreign reserves pressures and reduction in imports. When jobs are created through domestic production, the people of India can make a leaving and improve their lifestyle. It will then reduce the poverty rate within India that will increase the counties economic growth and development.

India's Structural Transformation

Structural transformation is described as the features of the development process, including both effects and cause of economic growth. It is an aspect that is characterized by the share of the manufacturing activities from agriculture and an increase in the percentage of the services for both workforce and national product. In India, their failure in the development process has been over the years be the shift of the high rate of the occupational structure of the workforce to the non-agricultural sector from agriculture that was unable to generate high growth rate in employment in their economy. Hence the country needs to increase the occupational transformation. Likewise, it requires the structural transformation to change its workforce since it has remained in low pay jobs and productivity making labour productivity to grow very slowly, leaving no room or additional employment (Mallick, 2017).

Hence some of the policies change for the structural transformation in India includes the development of the infrastructures, developing market-supporting facilities, implementing macroeconomic and sound credit policies. Having flexible labour market rules and having a conducive enterprise regulation and also that will acquire current and advanced technologies, inspire foreign investments and promote export. These are a measure that will increase the total economic productivity of the country (Mallick, 2017). There should also be various promotional and incentives measures that will help in achieving higher labour productivity growth through human capital.

Trade, Poverty and Inequality in India

Many opponents believe That when India opens is market to the international trade, it will widen inequality between rural and urban areas sates and regions and also households across the nation. It is believed that business tends to increase returns to numerous factors within the economy. It will also improve the allocation of reassures within the marketplace and also bring an increase in the geographical concentration of the county economic activities (Krishna and Sethupathy, 2011). Despite the numerous benefit trad rings to India, t still widens inequality within the country, increasing the level of poverty. Furthermore, trade liberalization in India has dramatically affected the rural areas where there is a high concentration of the industries that are affected by the tariff decrease, which has slowed the rate poverty level in the country.

It has also brought a gap between the rich and the poor, increasing the level of inequality in the nation.

Due to an increase in the elasticity of inequality that has increased in the concentration of the poverty level in the country due to trade openness, the government of India decided to embark on import substitution. Where they mainly pay attention to promoting their domestic products and services that had numerous advantages for an instant. It created employment opportunities for the citizens reducing the gap between the rich and the poor, which in turn reduce the level of poverty and inequity. Due to this, it assists in improving the economic growth of the nation through income generation activities (Krishna and Sethupathy, 2011).

The State of India's Health and Education Sectors with Policy Recommendations

Education and health sectors are defining for inclusive economic development and sustainability and human development in India. An increase in demand o of investments in other industry has developed an investment gap in these two sectors. There is also a calling in service distribution standards, incorporation of the technology and even performance benchmarks in the delivery of education and health services, especially from the most impoverished regions within the county (Arunachalam, 2010).

The school faces various challenges such as lack of infrastructure, systems of the teachings, gender issues, costly in the higher education and also inadequacy in government funding. Hence some of the policies recommendations put forth to solve these challenges include the adoption of technology, training of teachers, an increase in government spending on the education sector and inclusive of the education system. Other policies include the provision of quality education and establishment of the India Educational services and Public-Private sources that will encourage active participation of the sectors in the national development.

In regards to the health sector, it faces several challenges such as health infrastructure such as shortage of workforce and capital investments. There is a challenge of human capital crunch where the health care system needs skilled social power and problems in health insurance. Lastly is the challenge...