Poor governance in India: Part V
A free market requires protection of property rights, but no regulation, no subsidisation, no single monetary system and no governmental monopolies. It is the opposite of a controlled market, where the government regulates prices.
Free Market: In the context of globalisation, good governance is also linked with free market. A free market describes a market without economic intervention and regulation by government except to regulate against force or fraud. A free market requires protection of property rights, but no regulation, no subsidisation, no single monetary system and no governmental monopolies. It is the opposite of a controlled market, where the government regulates prices or how property is used. But free market also fails quite often because of the following factors: Environment as a public good: Certain parts of the environment such as communal land in Zambia could be considered a public good and as such have a characteristic of non-excludability. Commonly owned land where there are no established property rights produces little incentive to care for the environment. Slash and burn agriculture or chitemene can lead to deforestation, as cutting down trees incurs no cost given that the farmers are shifting to new areas. However, the environment does not conform to the other characteristic of public goods that of being non-rivalrous. Using the land for farming means that the land can’t be used for conserving wildlife. The environment is scarce and if the use of environment is free then it will invariable be over-used.
- Ignorance: Given the limited access to education there is considerable lack of knowledge about the impact of poaching and hunting on the population of many species of animals. Markets fail where the lack of information means that rational decisions are not made. If the communities were educated about the impact of their actions on the level of sustainability then different decisions might be taken.
Short term benefit versus long term benefits: Killing a rhino and selling its horn will generate considerable income and give significant benefit to the family of the hunter. However, the impact of killing the rhino on future generations is not considered. Self-interest, one of the guiding principles of the free market fails to take into account of the future interests of others. Little if any consideration is given to the future.Once the market fails, the public sector (which, in the context of India, is unfortunately synonymous with the government sector and also with the political sector) has to intervene so that the market works freely and smoothly and achieves its objectives in an optimum way.
It was in July 1991, that the economic reforms package was introduced in India that comprised both of macro economic stabilisation and structural reforms. Macroeconomic stabilisation basically implies cutting down fiscal deficits and the rate of growth of money supply. In other words, it focuses on control of inflation, fiscal adjustment and balance of payment adjustment. Structural reforms aim to improve the supply side of the economy and focus on trade and capital flows, financial sector, industrial deregulation and disinvestment of public sector undertakings. The reforms package also implies globalisation in terms of integrating the economy with the world economy. In other words, globalisation amounts to gradual opening-up of the economy.
It is, therefore, concluded that in the present-day world there are in all 11 basic characteristics of good governance. It is a matter of shame that India severely lacks in all of these.
It was in July 1991, that the economic reforms package was introduced in India that comprised both of macro economic stabilisation and structural reforms. Macroeconomic stabilisation basically implies cutting down fiscal deficits and the rate of growth of money supply. In other words, it focuses on control of inflation, fiscal adjustment and balance of payment adjustment. Structural reforms aim to improve the supply side of the economy and focus on trade and capital flows, financial sector, industrial deregulation and disinvestment of public sector undertakings. The reforms package also implies globalisation in terms of integrating the economy with the world economy. In other words, globalisation amounts to gradual opening-up of the economy.
It is, therefore, concluded that in the present-day world there are in all 11 basic characteristics of good governance. It is a matter of shame that India severely lacks in all of these.
Login
 Login through Social ID
|
