Economic reform measures have laid the platform for take-off, but remained half-starts. Opposition has stymied the two major legislative initiatives—to relax rules on land acquisition and to create a goods- and-services tax (GST) to replace the current maze of central and state taxes. Sequencing of reforms is equally important. It is often argued that factor markets have largely remained untouched by reforms. People have particularly the labour market in mind. Flexible labour markets always help in generating faster growth. According to Dr. C. Rangarajan “the time for modifying labour markets is when the economy is booming—that is, when the economy will be able to absorb easily the disruptions, if any, caused in the labour market. Labour will then realise that it stands to gain more by a fast-growing economy than by legislative constraints. It is only in a growing economy that new entrants join the labour force in a big way. It avoids the trap of the employed becoming the enemy of the unemployed. Thus, while some reforms of the labour market are necessary, they should wait till the economy gathers momentum and moves on to a stronger growth path”.
Prof. Amartya Sen has emphasised that the market economy does well for industries and agriculture, by and large, with a few exceptions it does not do well for education and healthcare. The important issue is of asymmetric information. This is a very important part in the understanding of any market economy. India is the only country which is trying to get universally educated and universal healthcare through the private sector. Japan, US, Europe, China, Vietnam, Cuba, Hong Kong and Singapore they all saw the importance of the state in making education and healthcare widely spread and universal. Educa-tion and healthcare were badly neglected and continue to be so even today. The fact that with an unhealthy, uneducated labour force, it is very difficult to generate income from them and very’ difficult for solidly-shared development growth at a high level to continue. In a
country where half the population doesn’t have a school to go to, to concentrate on the internet is a bit of a mistake.
Poverty reduction cannot be disassociated from non-performing loans by banks to big business while farmers end their lives, the former said to fuel the wheels of democracy. Without conscious recognition of this tripartite link and resolve to reset it, poverty Is bound to remain the most convenient and used political agenda item. Hopefully, 2016 will end-up showing promised change. Our education and skills development must reach many more than it does. We must improve the delivery of our social schemes and reduce thefts, waste, and improve efficient delivery.
While pursuing cooperative federalism, regional imbalance should not be overlooked. The growing gap in per capita income between the forward and laggard States is a cause of socio-economic stress. The ‘race to reform’ model does not take into account some factors driving longterm investment preferences : the institutional climate, urban infrastructure and social development. If the Western and Southern States have left their eastern counterparts behind, it is because of their traditionally superior governance, and health and education facilities.
Financing social sector through Central schemes is a phenomenon of the last one-and-a-half decades. However, while examining the various routes for social sector spending, through earmarked cesses and centrally-sponsored schemes in the Indian federal system, States are the primary drivers of social sector spending, be it on health or education. States’ share in social sector has remained significantly higher than the share of Centre. Over 20 per cent of the social sector expenditure by States is funded by Central transfers. Additional fiscal space given to States by way of increasing their share in the divisible pool, different States are expected to respond differently both in quantitative and qualitative terms. As things stands there has been no perceptible movement towards cooperative federalism.
“Praying without working is faith inaction.”
The most worrying failure been the absence of job creation the most important thing for government is to find out why m: jobs are not being created. The Sta: worst affected by drought are sdl not benefiting adequately from r MGNREGA. Policymakers sho_ emphasise the provision of adequaa job opportunities as economic grov— would be meaningful and inclus: only if the living standards of eve* Indian were improved. Policies a create more jobs and sharpen : skills of the labour force will needed to take advantage of derri graphic edge.
According to Pranab Bardhan, z output elasticity of employing: (which is the increase in employme for every 1 per cent increase in e: nomic output) is 0-2 per cent, ever ::i the highly labour-intensive serv:. sector. Nearly 30 per cent of Indr in the 5-24 age groups are neither employment nor in education training. India will have a lab.:. force of 568-4 million in 2020, additional 42-9 million people compared to 2015. This present- t unique challenge before polir makers—that of providing more : to the youth.
4-3 million jobs were added the Indian economy during the tv year period 2011-13. The rise formal employment was a mu: more modest rise of 2-7 million permanent workers. Today, close half or 43 per cent of governm; employees are temporary and many as 3.5 million government i have been outsourced to the priv: sector during 2000-12. The gove~ ment sector accounts for 58 per cer of formal sector jobs, but a good – per cent of these are temporary nature.
Ease of Doing Business
The government remains focused on the ease of doing busines Incremental steps to improve tr business climate in India are addr up. There is no point to deflect atter tion away from the many real ga_- in reforms. In the World Bank’s Eas: Doing Business Report for 2015, IncU