What strategies should the government implement to make the Indian economy strong and keep the growth constant?


Answer by Shubham Bansal:

Warning: This answer took me 4 long hours, a few dozens of articles on the Internet, a quick reference to all my previous answers and some from the better writers. So it is obviously a long one with 16 points! But you'll surely find something that will amaze you! I have even included a lot of blockquotes from the best sources. However watch out death from boredom.

Thanks for the A2A Dhakshitha Rao. I couldn't resist myself from answering about Narendra Modi, and the government of course.

Edit 1: I am grateful I found many related images, so you may just refer to them to understand more. And obviously to skip the boring text.

Edit 2: TL;DR version which was needed badly:
1. Stop subsiding wastefully
2. Interest rates
3. Disinvestment
4. Fiscal Plan
5. Infrastructure
6. Agriculture
7. Interlinking rivers
8. 5F formula
9. P4
10. Governance about outcomes not outlays!
11. Put 'life' in a 'file'
12. Making use of demographic advantage
13. Skill development & education
14. Jan Dhan Yojana
15. Make In India
16. Swacchh Bharat Abhiyan

Let's see India pre-Modi statwise.

India suffers from stagflation. Growth is 4-5%, half the level at the peak, inflation is 9% and rising , industrial production is declining and the public finances are a mess. Although the current-account deficit has narrowed to below 2% of GDP, it is flattered by a de facto ban on gold imports and could yet blow out to scary levels again.

-Quoted on Modi’s mission regarding India's economy in the pre-election period.

What went wrong? The raw inputs of growth—people and capital—have been deployed badly. The rates of savings and investment have dipped and their mix has deteriorated. High inflation has led households to buy gold, shifting money away from the banking system where it can be productively employed. And a mixture of bureaucracy, excessive leverage, incompetence and corruption has led private companies (whose spending tends to have the most bang per rupee) to halve their investments as a share of GDP. What has been invested has often been tangled in red tape and graft.

-Quoted on Modi’s mission about what went wrong with the Indian Economy.

What should do the government do?

1. Stop subsiding wastefully: All the schemes of public welfare end up in a few already rich pockets. Hence the government must review and assess all the subsidies. They burn a whole in the common man's pockets. The money should be directed more carefully, towards infrastructure and education. Water, fertilizer and power subsidies were like a thorn.

Remember this?
Amitabh Bachchan, Sachin Tendulkar, Aamir Khan are 'beneficiaries' of MGNREGA in Goa
It may have been proved wrong later, however I'm unaware.

BJP national treasurer Piyush Goyal says

"The hard reality is government money is required to be spent in more targeted areas. Subsidies must benefit the poor, not fuel the SUVs of the rich."

Source: business-standard

Source: in.reuter

2. Interest rates: Raghuram Rajan must carry on his tough stand on interest rates to control inflation. Interest rates affect inflation. When interest rates are increased, inflation decreases. That is because a higher interest rate will force people to save more than they borrow, hence lesser inflation.

See Balaji Viswanathan's answer to Is there a connection between bank interest rates and inflation rates? and all other greatly explained answers.

Source: ideasmakemarket

3. Disinvestment:

Source: business standard

4. Fiscal Plan:

The solution to India’s fiscal problem (it has not run a budget surplus since independence in 1947) is to expand the tax net. A proposed direct-tax code, and a goods-and-services tax (GST), should achieve this. With more revenue, the state can build more infrastructure: the experiment over the past decade of getting the private sector to do the heavy lifting has had mixed results. The GST also helps make India a single market by replacing a myriad of local levies. The bureaucracy needs to be reformed; Bimal Jalan, a former central-bank governor, says the number of ministries should be cut.

–Quoted on Modi’s mission about the fiscal policy.

"In the next two years, expect GST and DTC to be in place," says Kutumba Rao, finance expert with the Telegu Desam Party, a BJP ally. "With GST, the GDP will go up by at least 1.5 to two percentage points without any effort by the government, and the DTC will improve compliance."

– From Business Today.

Red tape interference and loss of taxes will always hurt the government and the country itself. There is no point complaining about the lack of development if you are the culprit yourself!

5. Infrastructure:

When we aim to match China and Japan, we must look forwards to the betterment of the most key aspect of a developed nation- energy.

Narendra Modi's recent agreeements and advances in the nuclear arena with Australia, Japan and the US signify his commitment to make India a good player in this dance for energy.
Cross country power grids with the SAARC and ASEAN fellows will greatly help us.
Also with Bhutan, his agreement is a plus for our hydroelectricity. Remember not even 2% hydro power is trapped from Bhutan. It will also help irrigation and flood control. Energy-hungry is the correct word for India. We must satisfy this growing little boy soon to see him become a robust man one day!

We must also look forward to a successful system of transportation if we are to make our mark on the world economic platform. Time is money. Hence the ambitious plans to invest in the semi-bullet trains.

Also solar energy and wind energy must be explored, but first comes the transition from thermal to nuclear energy. And yeah lesser people were killed during Fukushima nuclear disaster than those who die every day due to air pollution caused due to thermal power plants. Fukushima had a grand casualty total of zero!

He spoke at length on infrastructure – reviving shuttered power plants, modernizing railways, setting up gas grids and connecting India through optical fiber networks, but also combined that vision with proposals that will have a resonance with the aam aadmi and India’s farmers – building agro infrastructure, setting up mechanisms to monitor real time plantation and harvest of crops as well as courts to try hoarders and black marketers. Modi spoke also of building Brand India through 5 Ts – talent, tradition, trade, tourism & technology and said India’s demographic and democratic dividend along with these plans will set in motion the investment cycle and revive India’s stalled growth.

– Quoted Business Standard about Narendra Modi's economic plan's infrastructure aspect.

 Source: ET

6. Agriculture: Farmers have to be empowered.

  • New know-how has to be taught.
  • Vocational training has to be started along with new agricultural univ. and colleges.
  • All the schools and college labs must be thrown open for agricultural experiments during the summer vacations.
  • Radio must broadcast tips related to agriculture.
  • Soil testing laboratories must be easy to access. Also easy accessibility to agricultural experts must be ensured.
  • Mr Modi also plans to separate the procurement, storage and distribution departments of the Food Corporation of India to improve efficiency and procurement and distribution procedure.

If we can ensure all this, we'll not only be able to feed us and export more, but will contribute significantly to the environment whose positive effect will trickle down to all other spheres and will help us boost our economy.

7. Interlinking rivers:

Interlinking rivers is an idea that took shape in the Vajpayee era in 2002 – it seeks to link 14 Himalayan rivers in North India and 16 peninsular rivers in South India – but was put on the backburner after the Congress-led UPA came to power in 2004. "The idea has the potential to prevent floods and droughts, provide new sources of hydropower and irrigate millions of hectares of land," says Vinayak Chatterjee, Vice Chairman of Feedback Infra, a leading integrated infrastructure services company.

– Quoted on business today about the ambitious plan.

Imagine a country where people do not have to hold their hands up to the sky to pray for a shower. Was this our Bharat? Do we like it when states of our country fight for water? It's akin to two brothers fighting for the property and I feel like a helpless parent.

8. 5F formula

For the purpose of industrial development, Modi has cited the '5F' Formula – Farm to fibre; fibre to factory; factory to fashion; fashion to foreign.

This policy Modi said will help furthering the growth of textile sector in the economy. 'Nobody has a textile policy like us. It is based on five Fs. Farm to fibre; fibre to factory; factory to fashion; fashion to foreign,' said Modi.

-Economic Times.

This is very much required to curb the plight of the cotton cultivators and give the much needed impetus to the industry we always thrived at in the medieval age. Growing, manufacturing and export being done from the same place will make the farmers financially strong and will bring them into the financial mainstream.

9. P4

'If we want to implement good governance, we must look to P4 – people private public partnership,' Modi has said. 'We need to move from PPP to PPPP, People Public Private Partnership,' he opined.

According to Modi, people should be kept in the loop by the government. 'People should get a chance to speak before a government decision is taken. This will make people feel like they have had a role to play. Wherever possible we should take the consent fo people. This will speed up the pace of development,' Modi said.


Gone are the days when we just talked about public-private partnership. Add people to make it people-public-private partnership or fondly called as P4. We need the people to be involved in decision making and know what is happening. It will be a dream scenario. The confidence people lost in the Congress will come back with this.

Source: Home | www.narendramodi.in |           

10. Governance about outcomes not outlays!

In an attempt to distinguish between the two, Modi has said that while government means rules, governance means delivery. 'Government implies authority, governance means accountability,' Modi said.

Government is all about power, governance about empowerment, he added. Calling for decentralisation of power, he said the gap between people and administration was increasing.

Now I couldn't agree more. I have always been a fanboy of decentralization. "Less government, more governance" was NaMo's pet point during the elections campaigning which essentially means faster decision making, more accountability and more strength with able decision makers. This is what our economy needs right now!

Ministers and bureaucrats have been adviced to report at 9 AM, a thought hitherto unthinkable. Bureaucrats have been asked to function as Civil Sevants and not as the Queen of the Democracy. This is the single most step that will affect India as a whole. If implemented in letter and spirit, this will remove inefficiency and lack of will among the policy makers and implementors.

Source: veooz

11. Put 'life' in a 'file'.

Modi feels that the socio-economic impact of government schemes needs to be measured. This he said, will ensure that funds are being used effectively. 'We need to put 'life' in a 'file'. It isn't enough to put up facilities, it is equally important to improve the people's quality of life,' Modi said.

'The Sabarmati river front project gave the state carbon credits, improved the water table and reduced diseases in Ahmedabad. If we measure socio-economic benefits then it will improve our impact,' he substantiated.


Take MGNREGA as an example. It resulted in the poor quality roads being built in the villages again and again. No emphasis was given to healthcare or irrigation which are the burning points in a village. Similarly the authorities must keep a check on everything and must ensure that real benefits are reaching the people. Only money won't work, planning and will to improve life is the must.

12. Making use of demographic advantage

According to Modi, India is more powerful than China on two scores: demographic dividend and democracy.

'India is a young country. If we take advantage of the demographic dividend, we can change the face of the world,' he said. 'If we pay attention to skill development, then we can provide opportunities to our youth to become productive and creative… then we can do a lot of things,' Modi added.

-ET again.

NaMo mentioned this a few times in his Madison speech. The median age in India is around 26 years. We have a population that is very young as compared to Japan which is growing older by the day! If we pay more attention to skill development and meaningful training of the youth, we may see a long-lasting effect on the economy.

13. Skill development & education.

Modi said there was need to focus on employability in education. 'We have got the ability, that means we can do great work by means of skill development and vocational training,' he said.

According to Modi, development can be used to strengthen the country's economic structure. 'For example, the world needs teachers, nurses. We can develop the human resources and export teachers and nurses. We can add a new paradigm to economic development.'

– ET once again, they wrote all this brilliantly.

Opening new IITs, IIMs, AIIMS and other state funded collges and research centers will prepare us for tomorrow! The youth must not only have a degree but must add value producing capabilities into themselves and add wealth to the nation. Education is the only way forward. Most of the countries have skilled labour in the most menial jobs and hence perform greatly. The workers live a respected life in Scandinavian countries.

Source: wikipedia

14. Jan Dhan Yojana:

The program aims at creation of bank accounts with a 5000 Rs overdraft facility, a RuPay debit card and an insurance cover of 1 lacs. The scheme triggered opening of 1.5 crores bank accounts on the first day itself. This is a mega financial inclusion plan. Easier loans, lesser circulation of black money. India has 35% people with a bank account, lowest among the BRICS, as compared to 87% of the US and 95% of Canada.

Read Rohit Shinde's answer to : What are the pros and cons of the Indian Government's Jan Dhan Yojna?

Source: Niticentral

15. Make In India:

There's no denying that India, a country with demand, demographic dividends and democracy lagging in 134th place in the Ease of doing business Index is a heartbreaking scenario. To raise the standard of living, to make our country a major hub for industries and to embrace progress leaving behind our leftist leanings for good this is the right step ahead. There will be professional training in important sectors, more employment opportunities and the business houses will adopt a city to help in the creation of 100 smart cities.

Why did a majority of voters in Scotland reject independence from the UK? SeeBalaji Viswanathan's answer. Specifically the third point of What's Next?That pretty much sums it up. If India is to avoid being torn apart or internal stabbing, development, progress and growth is the only way forward.

I couldn't resist mentioning this again. India lies 134th in the ease of doing business index. What a great market of opportunities with extraordinary demands but govt. machinery just don't let anyone do their thing.

  • Make in India is a policy that combines incentives with easy handling of businesses and a faster redressal machinery. Only Business, NO harassment.
  • Skill endowment and job creation in 25 key industries.
  • Urging global investors to make India an industrial hub.
  • Raising FDI caps, red tape constricted in decision making.
  • Will help in achieving the target of 100 smart cities and affordable housing schemes.

Source: Breaking News from India, World, Business and Politics

Source: thehindu

16. Swacchh Bharat Abhiyan: Swacchh Bharat Abhiyan is not only about picking up the dry waste and posing for the cameras but it also includes solid waste management and waste water management, building new toilets and spreading awareness among the ignorant. We save our environment and boost tourism which in turn brings us the precious foreign reserves. Also we provide employment and opportunity to the related industries. With toilets will be accompanied a proper drainage system in the villages.

It is shameful that even after 67 years of independence we hear of rapes and exploitation for which lack of toilets is a big reason. Also the girl drop rate out of school is for the same reason. It will help in improving the life condition and literacy among the masses, especially girls.

Also this plan will help India cut down on the wasteful expenditure and the savings which are expected to be 6.4% of the GDP if the plan is 100% successful will surely help elsewhere.

Source: ndtv

I had to bring Bapu here so that we remember his vision, work harder to fulfill his dreams, his vision for our Bharat Maan. Can we give Bapu the India of his dreams by 2019? Let's start today!

Hence I wrote out my heart. Thanks for the read. If you made it till here without being bored to death I must pat you on the back 🙂

Have faith in the policies of the government. Have hopes and do your work well to contribute to nation-building.

If you found this helpful, You may also see:

Shubham Bansal's answer to How many policies and laws have changed in India since Narendra Modi became the PM? (435 upvotes )

Shubham Bansal's answer to What do you think of Modi's vision for India?

What is the potential impact of this year's budget on the long-term prospects of India's economy?

What strategies should the government implement to make the Indian economy strong and keep the growth constant?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s