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Impact of new Economic Initiatives on Human Development Index


I believe that no rules or laws are good enough to trigger the behavioral changes. Behavioral changes in Indian society of 120 crore people is the most difficult task for any government. The present government tried to influence the behaviour by implementing Clean India mission but still a long way to go. 

Though most of economic initiatives of Indian government were aimed at arresting circulation of black money and improve tax collection but its side effects are much more encouraging. Oppositions parties are shouting on top of their voice to raise concerns about state of economy but are unable to visualize the real changes on the ground.

I can visualize effects of new economic initiatives on the spending behavior of common Indian citizen. All sections of society are impacted my some or other economic policies. The economic policy can be designed for any purpose but results in curbing circulation of black money and when ever circulation of black money is curbed, it will be felt by individual as well as market.

Demonetization and GST are cited as worst decisions of the present government which have slowed down the growth of economy. Yes, there are some short term impact but these two will prove to be the pillars of new strong economy.

For any economy, the source of revenue is either Direct Tax or Indirect Tax. Demonetization has ensured that now onward majority of transactions are through bank and no one can hide income any more. The end result is behavioral change and majority of people have started following tax compliance, be it direct or indirect tax. GST is one major initiative triggering behavioral changes in business community. Smaller businesses are feeling heat as they still trying to find the ways for tax evasion but majority of businesses have already embraced GST.


In fact the biggest reform which is changing the lives of poor people is Jan Dhan account and Direct benefit transfer. In a recent study conducted by SBI it has been found that rural spending on alcohol and tobacco have reduced after JanDhan account. All of us see many advertisement to educate about harms of use of alcohol or tobacco but what advertisements could not achieve Jan Dhan account has achieved.  Directly Benefits transfer has saved about 58000 crore as claimed by Nandan Nilekani. This simply means same amount of cash has eroded from the black market.

Spending by poor on alcohol and tobacco caused big pressure on families to spend on child education and health. Now poor are able to spend more on child education and family health which will ultimately improve Human Development Index.

People have right to criticize government policies but demonetization, GST, DBT and Jandhan account are path breaking initiatives and will prove to be game changer for Indian economy and lead to better human development.

 

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