Economic Policy for Balanced Growth

Economic Policy for Balanced Growth

The broad objective of economic policy in India is to bring about rapid economic growth of the country. Economic growth to be meaningful, in a large country like India, should be balanced, regionally, locally, sectorally and temporally. Economists have made a distinction between the two terms, economic growth and economic development. While the term economic implies a quantitative increase in the volume of productions of goods and services in the country, as reflected by an increase in the real gross domestic product and real per capita gross domestic product and real per capital gross domestic product of the country over the years, the phrase economic development has a qualitative connotation besides its quantitative aspect. Economic development of a country implies not only a quantitative increase in the volume of production, but also a qualitative improvement in its distribution. The distributive criterion of economic development can be subdivided into four sub aspects and they are: the regional aspect, the local aspect, the compositional aspect and the temporal aspect.

Regional aspect: The regional aspect refers to the fact that in a large country like India, economic development should bring about a balanced growth of the different regions of the country. A mere growth of the gross national product of the country, even at a high rate, will not satisfy this criterion if a few regions of the country or states of the country advance economically in terms of economic activity and per capita income while many other regions remain backward.

Local aspect: The local aspect of distribution implies a balance among the different localities, cities, their hinterlands and the rural areas of a region. Left to itself, economic activity has a tendency to cluster in certain localities which gradually become industrial centers and cities and they develop leaving the villages and rural areas backwards, thereby giving rise to local imbalances.

Compositional aspect: The compositional balance of economic development implies that the different sectors of the economy producing different goods and services should expand in a balanced manner. The economy is usually divided into three sectors, the primary sectors, the secondary sector and the tertiary or services sector. Since these sectors are complementary, it is essential that they should grow more or less in a balanced order to sustain a high rate of economic development of the country, though the relative shares of the three sectors in the economy may vary depending upon their relative capacities to contribute to production, employment and human aspect. Besides, it is also necessary that there is a balanced expansion in the production of the different types of goods and services required by the people so that scarcities of necessary articles of general consumption