Abstract
Public policy and governance, which defines country’s growth strategy, plays a significant role in any country’s development story. In case of India, if its development and growth is compared with other nations, who were once just as developed as India was, we found that India has not been able to transform itself into a developed nation that it could have done by now. The reason behind this is not just slow but inconsistent growth of India’s GDP and its public finance policy, which together played an important role in its inefficient growth. India’s tax to GDP ratio and Expenditure to GDP ratio is just 1/3rd of most of developed nations like European Union countries which together have tax to GDP ratio as high as 40.1 % in the year 2011.India has never shown a consistent growth rate in its 65 years unlike its other peers for example Indonesia, Brazil, China. On the other hand, Indian government has been following divestiture led privatization policy, which raised the Non debt Capital Receipts for the country in place of contributing to the Non-Tax Revenue. These points of inconsistent growth, public finance policy leading to low tax to GDP ratio, divestiture led privatization prove that macroeconomic policy of India is not very efficient and it has not able to utilize its capital efficiently. Key words: GDP ratio, divestiture led privatization, efficiency, growth rate.
Highlights
India got independence on 15th August 1947 and successfully transformed itself from well-governed to a well administered country
The world has come a long way since 1947, and various nations like Brazil, China, Denmark, Japan, Malaysia, and Sweden have not just administered their country and managed their resources in order to have best in potential output. They proved their efficiency through their consistent growth rate, high tax to GDP ratios, and high HDI ranks
For example has shown a consistent growth rate of more than 7% for the last 25 years, which has made it to have the world’s second largest economy only to US
Summary
In case of India, if its development and growth is compared with other nations, who were once just as developed as India was, we found that India has not been able to transform itself into a developed nation that it could have done The reason behind this is not just slow but inconsistent growth of India’s GDP and its public finance policy, which together played an important role in its inefficient growth. Indian government has been following divestiture led privatization policy, which raised the Non debt Capital Receipts for the country in place of contributing to the Non-Tax Revenue These points of inconsistent growth, public finance policy leading to low tax to GDP ratio, divestiture led privatization prove that macroeconomic policy of India is not very efficient and it has not able to utilize its capital efficiently
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