India needs a new economic policy

Context:

The National Statistical Office (NSO) has released the 2022­23 GDP fourth­ quarter growth rate figures. Measured against fourth­ quarter ?gures of the previous year, the data give a gloomier picture than what the media publications of the Press Information Bureau present.

Picture presented by NSO data:

• First, the growth rate of GDP, since 2015­16 had been declining annually, and has fallen in the fourth quarter to what it was earlier and sneeringly referred to by economists as “The Hindu Rate of Growth” — 3.5% growth rate in GDP.
• Second, it is essential to recognise that since 2014, the economy has achieved the so-called “Hindu rate of growth” in GDP of what had been achieved in the period 1950­77, the socialism period.
• Third, during the tenures of P.V. Narasimha Rao and Manmohan Singh, GDP growth rates rose for the ?rst time to between 6% to 8% per year over a 15­year period, i.e., 1991­96 and 2004­2014 (with the usual cyclic ups and downs).

Reason for New Economic policy:

• State Intervention- There is increasing state participation and decreasing incentives for capital and labour providers, thus achieving a higher and faster growth of the economy.
• GDP growth rates- There is a serious and continuous decline in GDP growth rates which began in 2016. And that decline continues even now.
• Lack of structured policy- No policy structuring has been presented to ensure an annual doubling of GDP in five years, or, in other words, a 15% annual growth rate of GDP.

Way Ahead:

• Clear strategy needed- There needs to be a policy that is based on clear objectives, priorities, have a strategy to achieve targets, and spell out an intelligent and transparent resource mobilisation plan to finance policies.
• Interest rates on loans- Interest rates on loans to small and medium industries should be no more than 6% of the loans to increase production of these sectors, and thus employment.
• Interest paid on ?xed ­term savings - The annual interest paid on ?xed ­term savings in bank accounts should be 9% or so to increase the purchasing power of the middle classes.