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Industrialization: Its Difficulties

A country is considered superior and powerful only if it is scientifically
developed and technically advanced country. The need and importance of
industrialization is quiet evident in making India strong and prosperous. There
are many dangers of industrialization such as the gas leakage tragedy that
happened in the Union Carbide factor of Bhopal. To avert such tragedies in
future, strict security regulations should be imposed and sufficient
compensation should be given to the victims. Besides the above hazards,
Industrialization is facing certain problems which are discussed ahead.


The sorrow state of Indias infrastructure poses a major difficulty for doing business in India. For
Example: A truck covers 900 miles within four days from New Delhi to Mumbai.
Its takes months for get connected to power supply in rural areas and the telecommunication
sector is also underdeveloped. Indias poor infrastructure is a major set back to its economy. Substantial
improvements in the power, energy, telecommunications and transport sectors
need to be done.

India is now attracting foreign and private domestic investments to strengthen
the Indian economy. Indian telecom sector which was wholly under the government
ownership is now open to private players and foreign collaboration in this
sector is also being encouraged. To increase the manufacturing activity, heavy
investments in power and energy sector have taken place. Transportation sector
has also been opened to private player the government is offering incentives to
invest in constructing and operating highways, railways, bypass roads, bridges
and ports.


The major threat to Indias governance is Corruption. The government itself is a fountain head of
corruption making the situation worse for the business community. Corruption is
accepted by everybody and is present at all levels in the government sector.
Even the liberalization of economy cannot curb corruption because it has become
so deep rooted. Moreover the arrival of foreign companies, is giving way to
more corruption. The lack of transparency in the rules of governance, extremely
burdensome official procedures and unnecessary power in the hands of
bureaucrats and politicians are some of the reasons of corruption in India.

Health and Education
AIDS – a newly emerging threat and malnutrition continue to hinder Indias growth. The sex ratio of about 900 females for every 1000 males throws light
on the discrimination against women in India. The World Bank has increased its
support to the state government to help it in achieving the goal of providing
universal primary education to everyone. But health and education meters, while
showing a little development, still remain among the worlds lowest.

Tax Problems
Indias Tax system is the one with high differential tax rate falling on a narrow
base and tax reforms have been seeking to convert it into the one with tax
rates at moderate levels falling on a broad base. However, the governments income is constricted by an ineffective taxation system. Income tax can be
expertly evaded and the rural areas are not taxed because they are major vote
banks. As a result the government is only left with Excise and custom duties
which correspond to two thirds of all taxes.
Public sector
Another big problem faced by industrialization is Indias inefficient public sector. The mismanagement in many electricity boards have
led to their bankruptcy as they provided electricity at extremely subsidized
rates ignoring the large scales thefts of electricity. The effort that the
companies have to put in, to deal with Indias complex administration is an example of the cost of delaying reforms.
Financial Sector

In order to counter economic changes, Indias financial system still cannot efficiently mobilize and arbitrate capital. The
resultant high capital cost makes Indias export and industry less competitive. Despite of the recent progress, Indias equity market is still quiet volatile to enthuse confidence in foreign or
domestic investors. The liberalization of Insurance policy has been hindered
and Indias banking structure still remains inconsistent with the main state owned banks
carrying bad loans amounting to 15% to 25% of their total.

Labor Market

Indias labor market needs to be flexible in order to make its economy more
productive and its companies more competitive. Privatizations of Indias largest public sectors and other reforms have been muffled by the politically
powerful labor unions. Labor laws also hold back growth and effectiveness.

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