The founders of contemporary India strived to guarantee that the economic system was not concentrated on wealth. This approach was preserved in the Constitution of India. The constitution places a responsibility on the government to regulate the distribution of wealth. By implication, it should regulate the growth of big business groups. During the early 1950s, it was precipitated that the hastened growth being foretold by economic planners would additionally concentrate on monetary power. Restricting any such propensity became an essential part of the formal economic policy. Every firm in India was required to function in frames of strictly regulated strategy environment. It was to be exemplified by a difficult licensing regime commonly known as ‘license raj’. The policy obliged companies to seek prior permission to provide capital. They also were required to make inquiries before obtaining money from the financial institutions and acquiring foreign exchange (Drèze, 2013). The high tariff regime was enacted on raw materials and imported capital goods.
Concentrated ownership was present during this period due to institutional voids. Also, the absence of specified intermediaries in capital markets had its effect. In addition, some Indian families appeared to have resolute ownership at this time. The concentrated owners were consistently trying to use their business group structures as a means of launching new ventures.
The industrialist capital class was among the dominant groups. They were mainly under the power of some of the recognized business families from western India. The families were reasonably strong during the time of independence. India’s government had formed numerous public lending institutions. They provided loans from the biggest source of private industrial finance. The richer industrialists were allowed to produce goods way past the regulation by the government. The government chose to ignore this problem as these industrialists brought huge revenues. During the 1970s, the top 20 business houses were the ones controlling two-thirds of the private corporate sector’s total productive capital. During the second phase, in the late 1950s to the 1970s, the government of India mediated in the economy through several measures. Finally, there was the economic reform era that started with small steps of deregulation during the 1980s. It picked up speed during the 1990s because of the major economic crisis of 1991. The dominant groups played the ‘license game’. It was commonly known as ‘license raj’. The Ambani group was among the dominant groups that thrived on the pre-reform ‘license raj’ during the 1970s and 1980s. It became the nation’s biggest private entity. The ‘license raj’ was the outcome of India’s choice to have an economy that was planned. It allowed all the aspects of the economy to be controlled by the state. The licenses were only given to selected few groups by the government. Approximately 80 government agencies had to be satisfied first before the private companies could produce anything. If granted, the government was mandated to regulate the production of goods.
The Indian Economic plans were to be financed by the government. Often, it meant taking the resources away from the agricultural sector and directing them to the favored industries that were unworkable without support. Thus, the government starved the agricultural zone to supply services to companies it favored. With such a policy, it was not possible to alleviate poverty. In 1971, Indira Gandhi and the government attempted to abolish poverty by endorsing small enterprises.
The government programs net effect was based on taking away the resources from the agricultural products found in the countryside to offer it to the favored businesses in the cities. Thus, the effects on the agriculture were significant, and the government added programs to aid them. Those included fertilizer subsidies, for example. The programs used to help agriculture in the rural area originated from resources that the government took away from there. However, the fertilizer subsidy had been of higher benefit to the richer farmers compared to the poorer ones.
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India has several economic challenges today. High inequality in opportunities and severe deprivations are the major challenges faced by the country. Another significant aspect of the economy raising particular concerns for India’s social democracy is that of all the developing nations, India possesses the biggest informal sector. It has 94 per cent of the labor force that is working. The majority of workers face the brutal insecurity due to the absence of disability, retirement, health or unemployment benefits. Outside the agricultural sector, about 80 per cent of India’s labor force is in informal sectors. There is only a small minority of the formal sector workers (Drèze, 2013), who are about two-thirds of the government’s employees. They cling on to their worthless privileges with nervous militancy.
India does not appear to have inclusive growth to be able to cover issues associated with inequalities between, castes, genders, and regions. However, it should be noted that the government has narrowed the gender gap in political participation and employment. Nevertheless, the country still faces the problem of gender inequality. The government should make efforts to improve the safety and health of women and girls, as well as improve the social protection policies. Moreover, the country needs additional measure to ensure inclusive growth.
About 200 million Indians are aged between 15 and 24 years. Thus, India is well-positioned to take advantage of the growing population of the working age. Despite the opportunity to be able to reap from this demographic aspect, it is unable to properly manage the demand and supply of labor and skills. While the Indian government has initiated policies to enhance access to education, it also needs improvement in terms of its quality More specifically, it is still unable to increase the standards of methods of examination, teaching, vocational programs, and development of skills among others. India still faces the gaps between children from advantaged and disadvantaged backgrounds who cannot to study together effectively and respect each other.