Challenges of political reconstructions and its effects on the economy

The political system varies between countries, lets take for example poor western countries and rich eastern countries. In a lot of the cases a countries history determines its present political orientation and moreover its economic status. In order to construct a country there are alot of political and cultural problems we must overcome, for example, Its challenging to change the mindset of people when wanting to make huge changes, people especially elders are not open to rational changes. During the process of a countries political reconstruction, the economy might suffer a lot, which is natural hence there might be negative and positive outcomes. Today we’re using India as our example country hence it has the world’s fourth largest economy and is facing such problems mentioned above.

One of the main problems India is facing is bureaucracy hence its strongly affected by it. Bureaucratic structures tend to be backward-looking to identify procedures that have worked well in the past. This creates a conflict with entrepreneurs and innovation, concepts that are both forward-looking and attempt to create ways in which processes could work even better and more efficiently. India’s bloated government bureaucracy makes the execution of any fiscal or monetary policy difficult. India suffers of the so called “tax terrorism.”

When implemented in the right time correctly both fiscal and monetary policy can be extremely beneficial. In Fiscal policy the government uses its resources and taxing powers to have an impact on the economy. The best contribution that monetary policy can make to a sustainable growth is to maintain price stability. Monetary policy is the only tool that can effectively maintain price stability in the medium and long run. Monetary policy may be more effective if the problems being faced are perceived as short-lived, for example, caused by a temporary decline in consumer confidence, however, the economic problems are persistent in nature, then monetary policy is likely to be less effective.

Poverty and religion have a much higher negative impact on Indias ability to rise as a world leading country than someone might think. The lack of education and nutrient is a common problem there. Seymour Martin Lipset (1960) was the first to argue that places with higher levels of income and education are less corrupt. This hypothesis backs its claim with stating that voters with more education and income are more willing and able to monitor public employees and to take action when these employees violate the law. It is also argued that poor countries naturally tend towards corruption because through education people tend to more politically inlvolved.

India keeps turning heads as its economy is growing rapidly despite the awful conditions its been in. However whether its gonna keep striving that is for time to tell. Actions must be taken for it to stay on top of its league and catch up to countries such as China and the United states.

Read more: A Look At Fiscal And Monetary Policy 
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