Flexible market policies must for changing economic situation – GEA

17 Nov '08

4 min read

The parallel money market makes things more complicated. The black economy, which is estimated to be around 40 per cent of the national economy, is the biggest cause of failure of our economic policies. The policies have to be flexible enough to meet the ever changing economic situation in the country. This is again influenced by the world situation. Firstly the economic situation in India is bound to be influenced by what happens elsewhere in the world.

No economy can be a completely insulted economy these days as the economic landscape of the world is undergoing rapid changes. Economies are becoming more inter-dependent making it imperative for individual economies to align themselves in this process of economic convergence as the impact of global development are felt everywhere.

Secondly world events, together with planned development, create macro-level problems in India. Unless the government solves these, private sector, which functions at the micro level, cannot function efficiently. Flexible and integrated policies are perhaps the answer to the complex situation. However, without improving the delivery mechanism and institutional reforms their success is suspect.

The Government should encourage large scale investment in infrastructure and also take effective steps to reduce the production and transaction costs by providing adequate fiscal and commercial relief to exporters. The Government should also make efforts to ensure financial stability in the external sector along with the much emphasized need for price stability in the domestic sector.

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