This article comes from BBC News and discusses the increase of India's deficit and the proposed ways in which they are trying to recover from it. India has become one of the fastest growing Asian nations, behind China and Indonesia. However, this year India is only projected to grow by 5% which is significantly less than the previous year when India grew by 7.6%. In order to spur the economy the Indian finance minister, P Chidambaram has announced that the government will be increasing spending in an attempt to boost the economy from it's molasses-like pace. Chidambaram stated that the Indian economy is not a lost cause and it is too soon to give up. India was growing at a fast rate and it will again, it is just a matter of finding a solution that works for their economy.
India has an ever-growing deficit that has not been helped by subsidies which were placed on goods that are essential to the Indian population and the government. Food and fuel have both been subsidized. Chidambaram intends to decrease the deficit by raising revenue through raising taxes on India's extremely wealthy population and on domestic firms. Although the deficit has been increasing, economists in India are optimistic that India will be able to come recover from the deficit.
India is also looking at several other options to boost its economy. A bank for woman has been discussed. There are no banks of this nature currently in India. However, looking at the success of such banks in other nations promises hope for the Indian economy. The Indian congress has also looked into allocating money to fighting malnutrition, allowing Congress to gain favor with the population before the next election which will allow the current congress more time to work toward recovering from the deficit. Finally, an increase on import-duty for luxury items; such as expensive cars and yachts has also been proposed in order to increase revenue.
http://www.bbc.co.uk/news/world-asia-india-21611782
What is your opinion on the Indian plans to boost the economy? I think that in a country that is has such a big economic gap between rich and poor, increasing taxes on the rich will not be sufficient enough. It sounds like India needs a big boost in their economy. I don't know exactly what a bank for women is. Allocating funds to fight malaria in order to have more time to figure out how to recover from a deficit kind of sounds counterintuitive. I think that the increase on import-duty for luxury items will help because Indians on average are ordering more and more luxury items every year.
ReplyDeleteI think that it will take more than just taxing the rich and the wealthy companies to close the gap between the rich and the poor. While India has good intentions and is trying to come out of the deficit, I think it will take many years before they are able to lift out of their deficit.
DeleteWhile the article is vague, I believe that the banking for women is referring to the micro-loans that are offered to women because women are more likely to pay them back. This has been very successful in Bangladesh.
Ryan, when you say, “a bank for women,” I believe that they are talking about micro-finance banks we are talking about micro-finance institutions, or programs that give away small loans, ~5,000 or less, to 98% women in developing countries to expand their small scale homestead-style productions to larger more sustainable and profitable businesses. These small micro finance loans have been largely successful, especially in India. While these loans are available for both men and women, studies about, “moral women,” have led to 98% of financing going to women. The moral woman argument, briefly, says that women are more likely to reinvest the money from their businesses back into their families or their communities, thus, the loans will receive the most benefit if given to women entrepreneurs.
Delete(Google: Grameen Bank, Andy Grameen, Micro-finance)
I seriously can't believe that a country as large as India still doesn't have banking for women! Maybe the fact that India doesn't give equal opportunity to 50% of its citizens explains their sub par living conditions despite their rapid growth. That should be the first item on their agenda...
ReplyDeleteThat is an excellent point. In order for a country to have a substantial amount of positive economic growth, it needs to take advantage of all the resources available--this unequivocally includes women. However, this will take a great amount of time. For the women of India to have a recognizably large impact on the economy, the traditional views of women have to be changed. This means a shift in the mindset of India's culture, which the world most likely will not see anytime soon.
Deletein terms of these social economical statues such as the bank for woman and the increase on import-duty on luxury goods, I believe that within time as India keeps of developing as an emerging economy, with the influences of globalization, those changes will be made soon or later. Now, in terms of India's annual growth, that is just due to the global market and will (should) keep on growing within the years to come.
ReplyDeletehttp://www.bbc.co.uk/news/21611787
ReplyDeleteIn regard to establishing a bank for women, this BBC article details how a bank for women might not be the best solution due to "deep institutional problems" that are the real source of the financial exclusion of women. The author cites how a significant number of Indian women work in the informal economy, and don't have collateral against loans because they don't have the rights or title to property, which thereby makes it hard for banks to lend to them. Further roadblocks such as poverty, illiteracy and steep transactions costs keep many out of banking system. It would perhaps be more beneficial if the Indian government looked to other solutions to bolster financial inclusion: the use of regional languages in banking documents; microfinance; NGOs; providing easier credit and financial education.
A bank for women might be a good long-term goal, but in the short-term some of these alternative options would perhaps be more beneficial.
I would like to see India revamp their spending on social programs, but it is unbelievable that access to banking for women could be a way to spur economic growth. How about women can use banks just because its 2013. India should also focus on providing other basic living needs for so much of its population.
ReplyDeleteTwo quick comments:
ReplyDeleteFirst, I do not agree with India’s plan to increase taxes on the wealthy to spur growth in India’s economy. To a certain degree, I do think that wealthier citizens can reasonably asked to pay more taxes. However, in a country that supports a HUGE population, yet has a MUCH smaller taxable population, the burden can quickly fall too heavily on the wealthy citizens. When financial situations aren’t favorable for highly skilled, or highly wealthy individuals, especially in LDC’s, money can easily flee else where. With that, raising taxes on businesses in an LDC is also, in my opinion, and unfavorable decision. With an LDC, positive economic growth cannot be hindered, rather India’s government must find a way to tear down the barriers to positive economic growth as a solution.
Finally, I think the solution to both short-term and long-term economic growth and stability for India is micro-finance. With such a large illiterate and rural population, micro-finance provides easy avenues of opportunity. Most importantly, it’s success rate is unparalleled. I briefly provided a quick reference as to what micro-finance is in Ryan Mullarky’s comment above.