What are the reasons for India’s recent low economic growth figures?

Posted by Aman Kumar in Business and Economy
October 3, 2017

Reasons For Low Economic Growth

Imagine that you are appointed as a principal/director of a college which is notorious for cheating and poor quality of education.

You find that most students cheat during the examination with the support of the teachers and do quite well in exams. The result of the college has been always more than 90% in recent years.

You are a person with principles and hence you decide to totally eliminate cheating from the examination. You install CCTV cameras in all examination halls and take actions against the students and the teachers who are found engaged in cheating.

The result is that cheating is totally stopped in examinations.

However, the performance of your college dips drastically and less than 20% students pass. This has been the worst performance in the history of your college.

You now face flak from all sides.

  • Students are angry because they failed due to your strictness.
  • Teachers are angry because their track record got spoiled because of you
  • Trustees of college are angry because the result of their college has taken a beating under your charge.

This is what is happening in India right now.

The steps of demonetisation and GST, taken by the present government have disrupted the black economy in the country to such a great extent that it has impacted economic growth of the country negatively.

Why Good Intentions Are Not Enough

If you face such a situation, you often wonder:

  • What wrong have I done to deserve all-round criticism?
  • Why do bad things always happen to good people?

It is important to understand that cheating in examinations is merely a manifestation of the malaise of your college.

A college is inflicted with cheating menace when:

  • Good teachers are not appointed in college
  • Teachers don’t teach properly in the classes
  • Good students don’t take admission in your college due to its reputation
  • Students don’t attend the classes
  • The infrastructure of the college is bad

Students cheat in examinations because there is no learning round the year.

Teachers help to cheat because they don’t know how to teach well or they don’t want to teach.

You have to set the system right by taking care of all factors for a long time to bring real transformation to your college.

However, you as a principal acted only on the symptom of the disease, that is, cheating, while no action was taken to get to the root of the problem and cure the ailment.

Your action is bound to fail because symptoms shall be back again unless the disease is cured.

Cash Economy Exists For A Reason

It is important to understand that black money exists in a country like India because of several factors like:

  • High rate of taxation
  • Lenient punishment for tax evasion
  • Poor law enforcement system
  • Corruption in government departments
  • Poverty and illiteracy

The system of the country is such that each factor supports the other factors.

If you remove one factor without changing the other factors, the edifice of the economy is likely to collapse.

  • If you replace the tyres of a car with the tyres of an aircraft, it is not going to run any faster.
  • The car would stop moving altogether because it the aircraft tyres can’t fit into a car.

This is what has happened.

After demonetisation, the cash has disappeared from the market, which has affected all business activities where the use of cash was quite prevalent.

If you wish to eliminate the cash economy, you have to improve the entire system of the country.

You can’t solve the deep problems of a developing economy by providing a symptomatic solution.