Sample Cliff Note on Industry In India by Rajdeep Sharma
[Note: This is only one page of a much longer cliff note.]
Chapter 2
If India’s goal of an 8% GDP growth rate is to be achieved, the agricultural sector needs to contribute 4% to this growth rate, according to the PM Sinha, the chairman of Ficci, an important Indian agricultural task force. The agricultural sector will be a key area of focus in the Tenth Five Year Plan. The government needs to provide the infrastructure to foster a healthy agricultural sector, but step aside to encourage private sector competition. Subsidies to farmers need to be replaced with incentives, prices need to appeal to both affluent and poor farmers. Capitalism’s competitive temperature is the only way to ensure the growth of the agricultural industry.
Another problem is over taxation, particularly local taxes. This can be remedied by privatization. Technological innovation in the agricultural industry has been slow, and crop failures, dependence on monsoons and droughts have, in part, caused variations to the quality of harvest. The first Five Year Plans, as we have seen, focused too much on the industrialization of India and too little on agriculture, thus neglecting one of the core and indispensable sectors for the growth of the economy.
But agriculture is a large sector and increased nearly threefold between 1955 to 1995, (which translates into an average annualized growth rate of 2.6%). Substantial quantities of milk and grains need to be produced. Despite having a robust tea industry, labor costs can be as high as 46% and yields are lower compared to other competitors like Kenya and Sri Lanka.Assam, which is India’s main tea contributor, has experienced vicissitudes in weather and yields. India’s tea is experiencing stiff competition from Kenya and Sri Lanka.
India has come a long way over the past decade to rid herself of the clamping socialist mentality that has caused more red tape and inefficiencies than privatization and capitalism. The country is poised for industrial development with a current Prime Minister, Dr. Manmohan Singh, who was instrumental during the leadership of Narasimha Rao. Dr. Singh has witnessed the development of industry in India for decades, and with his previous experience as Finance Minister, he knows the real problems of the country and particularly those of rural India.
The momentum of high-growth industries like IT needs to be maintained, and languishing sectors like agriculture need accelerated development, fresh injection of foreign capital and deregulation. The agricultural sector unfortunately depends heavily on positive weather and the appropriate infrastructure, and is critical to nourishing the rapidly burgeoning population. But industrialization and deregulation cannot gallop at a pace that will leave the economy behind. They need to happen prudently and cautiously, without causing segregation. Industrial India is a sleeping giant that has barely begun to wake.
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