Modern India is a developing country with the influential industry and military-civilian transportation as well as considerable work resources. Among the chief trading partners of this country are China, the United Arab Emirates, the United States, Saudi Arabia, Switzerland, Indonesia, Germany, and Hong Kong (Altbach 20). The government seeks to spread the regional organization of Indian exports by expanding markets in the states of Asia and Africa. One of the major and largest branches of the Indian economy is the fabric industry. The exact share of the textile industry is 14% in overall industrial production and 3% of the country’s Gross Domestic Product (Anand 140). The government increases and implements individual tools, designed to raise the attractiveness of the country as a ‘platform’ for hosting different export-oriented industries. At the same time, agriculture is also a fundamental sector of the economy and employs on 45 % of the population (Altbach 20). The status of farming in India continues to be harmfully affected by such constant problems as an underdeveloped infrastructure, lack of investment, and the low level of mechanization. However, in India, there is a scientific and technological potential and a rapidly expanding service sector that includes construction and engineering services, information technology and communications, monetary banking, insurance services, and trade. India is the main importer of oil and an exporter of petroleum goods. Therefore, nowadays, the Indian economy is one of the major in the world in terms of Gross Domestic Products because in the framework of the financial liberalization, this country pursues the foreign trade strategy in order to increase the volumes and expand the geography of its general exports.
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Nowadays, the main task of the country’s fiscal policy is to maintain the achieved charge of recovery and raise the living standards for the population. The financial system of India is in a good condition, which is a key element in the future growth trajectory of the government. The ability of banks to channel domestic savings and foreign capital into creative investments and supply all kinds of fiscal services to different financial services, including payment, investments, insurance and pension goods, will positively influence the economy and social stability in India (Baka 415). Over the years, many government committees have systematically studied positive aspects of economic reforms in India. However, this was the first attempt to create a widespread program of action for the growth of the fiscal sector.
There is a deep interdependence between different reforms, including broader reforms of financial and fiscal policies, and a necessity for the actual progress in the financial sector. India’s fiscal system does not offer the necessary services to most local retail clients, small and medium-sized enterprises as well as big organizations and corporations. The growth of the fiscal sector is deferred by the fact that 60% of the banking system is state-owned, according to the level of assets (Anand 143). Therefore, the fiscal policy of India needs a positive update. At the same time, there has been hopeful progress in reducing the funds deficit, although this can only be a recurring improvement as the effect of the country’s strong economy. Nevertheless, currently, the state’s refusal to offer certain types of loans to farmers and increase the subsidies to the civic sector oil companies raise severe fears that this acceptable fiscal policy will be sacrificed to the elections. The great budget arrears threaten the future increase and they can absorb economic resources that would if not be available for the personal investment.
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The modern monetary system of the independent Republic of India includes the Reserve Bank of India, commercial banks, and management agencies. The greatest part of this system is controlled by Indian large businesses, while the smaller one – by the British. The main role of monetary policy is played the state and semi-public institutions of long-term credit and the credit cooperation. At the head of India’s monetary system is the Reserve Bank of India, which is the issuing institution of the government as it plays the role of the ‘bank of banks’, lends to profitable and cooperative banks as well as finances institutions with long-term investments (Kale 5). The Bank controls the activities of all other institutions, directing funds to the general industry and farming cooperation. In other words, the Reserve Bank of India serves as a government banker.
Indian commercial banks play the main role in lending to the Indian private businesses and the government. At the same time, the state Bank seats about 46% of deposits in states securities, helping to strengthen state positions in the manufacturing sector (Anand 145). The bank prefers to loan to merchants speculating in foodstuff products as they pay the main interest. The long-term financing of the majority of India’s industries and farm economy is performed mainly by organization agencies.
Some of these agencies are prohibited from involving the foreign capital, which puts its major task to master plantations, extractive economy, to finance India’s industrialization. In lending to small-scale manufacturing and agriculture, usury capital plays a chief role. Thus, in the list banks, credits to farmers do not even reach 2% of every loan (Anand 144). Moreover, many small cities still have no banks. In the struggle with usurious capital, the government of India uses the monetary cooperation of rural and urban areas.
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Exchange Rate Policy
The links between macroeconomic management and the growth of monetary sector are deep and mutual. Thus, disciplined and conventional economic and fiscal policies serve as the basis for reforms in the financial sector. A well-functioning monetary system is central for ensuring a successful impact of macroeconomic policy actions (Tomlinson 10). Regardless of its shortcomings, India’s macroeconomic policy has ensured economic development. Cross-border flows of resources have improved, and they are likely to stay high and volatile, which makes India’s financial policy extremely complex since these flows influence the domestic money supply and trade rate.
At the same time, the existing organizational measures become less effective since investors always discover ways to avoid them. The only viable option is the adoption of expected and consistent policies that, at least, do not lead to instability and that allow policymakers to react rapidly and appropriately to emerging shocks (Tiwari et al. 520). The Reserve Bank of India successfully fulfills several functions assigned to it by maintaining a sensible control over inflation as well as the organization of certain weight on the exchange rate and coping with money inflows in a strong monetary development. However, there is a threat that in performing its functions, the Bank has reached its limits (Santhi and Ganesan 7). The current volatility of the rupee rate has given an increase to the new calls for a more vigorous exchange rate management, which becomes increasingly difficult to do as the opening of new accounts increases.
The trade policy of India makes it one of the most comprehensively developed countries on the entrepreneur path of growth, free from the state interference. At the same time, in the foreign trade and industry as well as in domestic economic problems, the trade policy is expected to help overcome the country’s economic backwardness. The primary task is to accelerate the development of national productive forces (Wray 6). Therefore, to make a better use of domestic resources and funds raised from abroad as well as to provide a general coordination of the activities of the public and private sectors of the national economy and overcoming dependence on imperialism, the state has begun to apply actively its programming and planning methods in the economic policy.
The consequence of foreign economic relations for the economic growth of India is determined by the need to attract extra material and financial resources to the government as well as promote local products on the global market. Moreover, such a need increases manifold in the times of systematic and technological revolutions because distant economic relations become among the main channels, through which technological and other achievements from developed countries arrive to the country (Santhi and Ganesan 8). Thus, India’s use of foreign financial relations is accepted in order to end its economic dependence on imperialism and to strengthen the financial independence of the state.
The key areas of the trade policy in India are supplied by the sufficient liquidity to meet rising credit needs, maintaining high asset conditions in the economy, and calculating inflationary processes. Discussions are under way on a possible change from a partially convertible note, banned to import and sell abroad, to a fully convertible rupee (Sadanandan 290). Thus, India needs to add to the flow of foreign investment to fill the excess production ability. This underscores the meaning of the trade stability of successful principal management, which should go after any actions towards convertibility.
As the leading developing country, India attracts considerable scientific and public interest. The dynamic growth of the country’s economy leads to severe environmental issues of the national and the global scale. If India approaches the level of consumption of developed countries, the world expects an ecological catastrophe, while a direct transition to sustainable growth models seems difficult to implement. The major causes of pollution are economic development and population rise (Tiwari et al. 523). The same factors are accountable for other common issues such as increasing the amount of waste, environmental issues of cities, and lack of water resources.
These conditions are comparable to the issue of the use of energy resources as well as mineral resources in general. In India, much more attention is paid to the management of wildlife, the issues of forest and biodiversity loss. The impact of the state of environment on humans’ and animal health as well as the social and educational aspects of environmental issues occupy a major place in the country’s environmental policy (Baka 412). The environmental legislation has a long history, going back to the 19th century. Thus, the Indian colonial era had a series of laws regarding the protection of forests. The law synchronized the forest industry and regulated the concept of protected areas for the conservation of forests and protection of animals. The Indian legislation offers exact mechanisms for the implementation of environmental policies. Most of them presuppose management and control of the adherence to various standards.
Current Macroeconomic Issues of India and Their Impact on the Rest of the World
The main current macroeconomic issues of the Indian economy are the strong dependence on the imports of basic oil. The explored reserves of coking coal are rather restricted, the quality of energy coals is low, while the government experiences chronic blackouts and overall lack of electrical energy (Tiwari et al. 525). With the large number of poor people in the country, the state has to spend significant sums to provide them with at least minimum level of living standards, which puts a serious strain on the country’s finances. In the main sectors of the economy, state corporations continue to control and impact the rest of the world, which adversely affects the growth of competition and other market mechanism due to regulation and bureaucratization of organizational decision-making processes and general corruption. The main current macroeconomic issue of the Indian economy, which also has an impact on the world in general, is the underdeveloped transportation of the country (Tiwari et al. 525). At the same time, numerous issues influence the lives many Indians who work in the agricultural sector. Thus, these problems are the prevalence of landholdings as well as a small number of private farms, the low computerization of agricultural production, lack of storage facilities for agricultural products and subsequent major losses of production at various stages of its use, and high transportation costs for final products. Finally, environmental problems and their solution are in a direct correlation with at least a third of the world’s populace.
The Government’s Measures to Tackle Some of India’s Macroeconomic Issues
Despite the impact of the global monetary and economic crisis, the Indian economy is assessed as stable and having a constructive momentum. India is a rapidly rising country since it has demonstrated a stable economic growth in the recent years. Moreover, like any other state, this country implements measures to combat macroeconomic issues. Having considered the main political, social, and economic issues of India, one should note that each problem stems from the other, all problems are unified, and they represent a holistic sphere of issues, where the key for one problem is hidden behind the solution of the other (Tiwari et al. 525). The main way to solve all imperative issues is to raise the socioeconomic stage of the growth at the individual and state level.
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Therefore, thanks to the proper governing, India’s economic development is observed, and, as a result, the quality of life improves. The incomes of the population grow, while poverty rate drops with the growth of literacy rate. Similar central factors for the country’s successful development are seen in maintaining internal political stability, countering the threats to the state’s independence, avoiding religious fanaticism, and affirming the principles of federalism as proclaimed by the Constitution of India (Santhi and Ganesan 12). The state invests money in the growth of social infrastructure such as public catering establishments, healthcare, learning, cultural and activity institutions, housing and communal services. Finally, funds are also allocated to the development of transportation and communication networks as well as environment protection facilities
Personal Opinion About Those Policies
The regional authorities are imbued with powers in such spheres as civic order, health, agriculture, and local transport networks. Therefore, the administration of justice, social, and economic growth as well as family planning, birth control, education, and forestry are managed by central and regional authorities (Sadanandan 290). In my opinion, the subjects of reference and powers of the central government include the most important national issues such as the defense of the country, foreign policy, the financial or banking system and communications as well as transport infrastructure and macroeconomics.
According to modern monetary theory, the economy of India develops in the conditions of structural transformation and the solution of numerous internal economic and social issues (Wray 9). At the same time, India quickly gains leading positions in the world economy since it is involved in the process of globalization. The theory of demand-side economics presupposes that the country’s growth after gaining independence is achieved on the basis of a market economy with a major, sometimes decisive, role of the government (Wray 10). I think that India faces an enormous task that involves the creation of an independent financial system, including industrialization, the development of agricultural production, and the creation of a successful economic structure as well as the conquest of new positions in the intercontinental division of industry. Finally, power theory of economics implies that India’s economic problems, such as the acute issues of poverty and hunger, agrarian overpopulation, and mass city and rural unemployment, demand immediate solutions (Wray 9). Nevertheless, the steady economic development for decades has contributed to solving the acutest common issues of this enormous country.
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India is the leading country in the region and a growing claimant for a place among economically developed countries. Like any other state, India strives to improve its domestic and foreign policies, particularly fixative, trading, and environmental ones. In each of these areas, India has some positive aspects of development. India’s internal policy also depends on its the improvement of many aspects. According to macroeconomic theories, the problems of one country cannot affect the world in general. Nevertheless, any country and its problems have some economic, political, or geographic influence on the world. In recent years, the economy of India has seen a significant growth. The development of the economy is stimulated by the intensive growth in the provision of services. The Indian government implements active measures to achieve positive dynamics in the economy by using the levers of circuitous regulation of the civic economy and openly participating in the reproduction practice through the mechanisms of the local sector. India seeks to work with other major world powers in the development of economic ties. Nevertheless, the country needs a huge amount of imported energy and mineral resources, which are vital for the well-being of people, to maintain its growth momentum. This is just one example of India’s increasing interdependence with the rest of the world.