Government Intervention in India

Document Type:Case Study

Subject Area:Economics

Document 1

The responsibility of government in developing economies is definitely vital. Morality which is the set of rules prevailing conduct that rational individual can agree to on the condition that others agree to them as well thus shared and accepted values refer to cultural standards that point to the general good believe enviable for organized social life hence they assume what is right and important for society, thus they offer the ultimate definition and authority for social measures and social behavior since they are the abstract sentiments. The country’s economy is seen to be highly determined by the type of government that is in power. Therefore the intervention of any government to the business sector is very essential in ensuring that the economy is improved.

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The role of the government in the transition of economies is of great importance and one of the major ways the government is doing the same is through laying down rules and regulations to be followed. The intervention may affect the business activities either positively or negatively. some of the effects are discussed below; Eliminate market failure With the government intervention, the exploitation of the environment in general by the firms that are coming up will be put to a stop through some set regulations. Through this the government will have helped in getting rid of the market failure thus ensuring that businesses continue to run as usual. Improve infrastructure The involvement of the government in the economic sector has greatly improved the business activities in the state as it had ensured that all entrepreneurs are catered for.

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The government has done this through improving the state of the transport sector like roads to facilitate swift movement from one place to another. They believe that when the large retailers come in the country they will affect all the chains. They are using an experience which was observed in Thailand and by so all they want is to protect the local small traders from shutting down their shops. Trade This is the main reason as to why they are denying them a way through into the country. India is worried about their local farmers’ produce. They are foreseeing the situation where by the retailers will be bringing their products from outside hence killing the trade that exists between the producers and the small traders in the country.

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Reduction of taxes The government of India should also ensure that the amount of money taxed from a variety of products is lowered significantly. This reduction ensures that many people are capable of purchasing the products. The more the products are bought all round the country, the more revenue is earned which aid in the general growth of the economy. Foreign investment The government encourages more private and foreign investments in the country as they increase the supply of capital. The increase in the supply of money indicates a productive country therefore growth of the economy. Rajaraman, V. History of Computing in India. The death of Irish trade protectionism: a political economy analysis. Santonu Basu (2009) Government success, failure of the market: a case study of rural India, International Review of Applied Economics, 23:4, 485-501.

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