Short term growth is the output of a country in terms of GDP over a given short period of time, generally a year. It is measured by the annual percentage change in GDP. While, long term growth is when the country's productive potential is increased, the potential of the country's GDP is increased. Due to an expansion in either the quality or quantity of factor inputs, the country is now able to produce more. A student who crams for an exam by memorizing answers or developing absurd mnemonics and gets 100 percent tomorrow only to forget everything he learned one month from now is more harmful than a student who has “learned” the concept for the long-run. Similarly, even a runner can’t afford to win only the upcoming race by risking his whole career. While short term strategies can deliver an immediate impact, to stay in the top in uncertain times, the champions are the ones to take the long view. Ferrari has reached it’s peak in racing world, the earlier CEO Montezelo had long term plans, he signed Michael Schumacher and even though the short term setback of Schmacher’s engine blowing up didn’t stop Montezelo from sticking to his plan. Long term growth plans helps to study the market accordingly with time and bring necessary actions into plan, gets the clear picture as to when the setback of short term defeat can be covered up. The biggest setback of short term goals is that it neglects the future changes. For example, the recession of 1970 in America was due to the banks getting carried away by short term benefits overlooking the risks in future. In the last four years, India has improved its macro strength considerably through structural and institutional reforms. India has seen a sharp improvement in its inflation dynamic after the Reserve Bank of India (RBI) adopted the flexible inflation-targeting framework. GST is one of the best examples of long term goals. It all started with panic and confusion and everyone was busy dealing with the teething problems of this huge tax reform. In the long run, the concept of GST is laudable, India’s tax-to-GDP ratio shall increase, it brings uniformity of taxes, elimination of cascading effect of taxes and improved efficiency in logistics. Another great example of long term goal is demonetisation. Though in the short term the people had to face lot of problems but in the long run the perks awaited like over three lakh shell companies have been unearthed, the importance of cashless economy is realised. Due to all these movements, India is blooming in it’s economy.
GST and demonetisation are two important long term goals in recent days. Due to our varied climatic changes, we need to make our tax policies flexible enough such that it’s a win-win situation for the government as well as the seller for off-season times. The government can put luring incentives for cottage industries and other small scale industries for paying of taxes as India’s employment constitutes mostly in these sectors. The government can also look forward to setting up alternate industry for places that are dependent on climate. When it comes to technology, our government’s initiatives like “Digital India” , “Make in India” are excellent initiatives but fail to lure the appropriate number of takers as expected. We should cut some tax on MNC ’s setting up or new industries which have the potential to create a mark globally, as they can help in bringing foreign money in thus, giving a boost to the economy. There’s a bigger picture to this, the companies which set off here to a global picture can also bring technology for us which in-turn creates employment. For technology, sky is the limit and it all depends on the government when to grab the opportunity and use it. But it better be fast, because we are not alone in the battle and these weapons are available to everyone, it just depends on the way one uses it.
This year the Nobel prize was awarded to William D. Nordhaus "for integrating climate change into long-run macroeconomic analysis" and Paul M. Romer "for integrating technological innovations into long-run macroeconomic analysis." An economy survives on varied factors, climate and technology are two things which change the bigger picture in the long run. Climate is responsible for the varied economy within different nations, like we can’t expect cotton to grow in Darjeeling, or tea plantations in Rajasthan. It’s all because due to climate we cannot have each and every product manufactured everywhere, due to which it affects the economy of that place accordingly. Technology on the other hand, in today’s fast-pacing world plays an important role in determining the economy in a secondary way. If there’s a blooming economy then the possibility of more innovations is more as companies would like to hit the market when it is at the peak. On another viewpoint, technology helps in processing faster hence, allowing larger gain from short inputs. For example, if we can pace the crop processing and packaging then we can have the heads-up to produce more crops.
Nordhaus and Romer
GST and demonetisation are two important long term goals in recent days. Due to our varied climatic changes, we need to make our tax policies flexible enough such that it’s a win-win situation for the government as well as the seller for off-season times. The government can put luring incentives for cottage industries and other small scale industries for paying of taxes as India’s employment constitutes mostly in these sectors. The government can also look forward to setting up alternate industry for places that are dependent on climate. When it comes to technology, our government’s initiatives like “Digital India” , “Make in India” are excellent initiatives but fail to lure the appropriate number of takers as expected. We should cut some tax on MNC ’s setting up or new industries which have the potential to create a mark globally, as they can help in bringing foreign money in thus, giving a boost to the economy. There’s a bigger picture to this, the companies which set off here to a global picture can also bring technology for us which in-turn creates employment. For technology, sky is the limit and it all depends on the government when to grab the opportunity and use it. But it better be fast, because we are not alone in the battle and these weapons are available to everyone, it just depends on the way one uses it.
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