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The Journey of Economic Reforms During

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Finance minister Arun Jaitley presented Union budget 2018 in Parliament on 1st February 2018, the Narendra Modi government’s last full budget before the 2019 Lok Sabha elections. Jaitley’s budget allocated billions of dollars for rural infrastructure and unveiled a health insurance programme for around 500 million poor. Jaitley stated “we pledged to the people of India to give this nation an honest, clean and transparent Government. We promised a leadership capable of taking difficult decisions and restoring strong performance of the Indian economy. We promised to reduce poverty, expedite infrastructure creation and build a strong, confident and a New India. When our Government took over, India was considered a part of fragile 5; a nation suffering from policy paralysis and corruption. We have decisively reversed this. The Government, led by Prime Minister, Shri Narendra Modi, has successfully implemented a series of fundamental structural reforms. With the result, India stands out among the fastest growing economies of the world.

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The journey of economic reforms during the past few years has been challenging but rewarding. As a result of the reforms undertaken by the Government, FDI has gone up. Measures taken by the Government have made it much easier to do business in India. Natural resources are now allocated in a transparent and honest manner. There is a premium on honesty. There was a time when corruption was common-place. Today, our people, especially our youths, are curious to lead their lives honestly. The indirect tax system, with introduction of Goods and Services Tax, has been made simpler. Benefits to the poor have been targeted more effectively with use of digital technology. The demonetization of high value currency has reduced the quantum of cash currency and circulation in India. It has increased the taxation base and spurred greater digitization of the economy. The Insolvency and Bankruptcy Code (IBC) has changed the lender-debtor relationship.

The recapitalized banks will now have a greater ability to support growth. All these structural reforms in the medium and long run will help Indian economy achieve stronger growth for a long time. Indian economy has performed very well since our Government took over in May, 2014. India achieved an average growth of 7.5% in first three years of our Government. Indian economy is now 2.5 trillion dollar economy – seventh largest in the world. India is expected to become the fifth largest economy very soon. On Purchasing Power Parity (PPP) basis, we are already the third largest economy. Indian society, polity and economy had shown remarkable resilience in adjusting with the structural reforms. GDP growth at 6.3% in the second quarter signalled turnaround of the economy. We hope to grow at 7.2% to 7.5% in the second half. IMF, in its latest Update, has forecast that India will grow at 7.4% next year. Manufacturing sector is back on good growth path.

The services, mainstay of our growth, have also resumed their high growth rates of 8% plus. Our exports are expected to grow at 15% in 2017-18. We are now firmly on course to achieve high growth of 8% plus. We have taken up programmes to direct the benefits of structural changes and good growth to reach farmers, poor and other vulnerable sections of our society and to uplift the under-developed regions. This year’s Budget will consolidate these gains and particularly focus on strengthening agriculture and rural economy, provision of good health care to economically less privileged, taking care of senior citizens, infrastructure creation and working with the States to provide more resources for improving the quality of education in the country. Prime Minister Shri Narendra Modi has always stressed importance of good governance. He has articulated the vision of ‘‘Minimum Government and Maximum Governance’’. This vision has inspired Government agencies in carrying out hundreds of reforms in policies, rules and procedures. This transformation is reflected in improvement of India’s ranking by 42 places in last three years in the World Bank’s ‘Ease of Doing Business’ with India breaking into top 100 for the first time. I would like to congratulate all those who worked to achieve this.

Now, our Government has taken Ease of Doing business further by stress on ‘Ease of Living’ for the common men of this country, especially for those belonging to poor & middle class of the society. Good governance also aims at minimum interference by the government in the life of common people of the country. Government is providing free LPG connections to the poor of this country through Ujjwala Yojana. Under Saubhagya Yojna 4 crore household are being provided with electricity connections. More than 800 medicines are being sold at lower price through more than 3 thousand Jan Aushadhi Centres. Costs of stents have been controlled.

Special scheme for free dialysis of poor have been initiated. Persons belonging to poor and middle class are also being provided a great relief in interest rates on housing schemes. Efforts are being made to provide all government services, whether bus or train tickets or individual certificates on line. These include passports which may be delivered at doorstep in two or three days or Company registration in one day time and these facilities have benefited a large section of our country. Certificate attestation is not mandatory; interviews for appointment in Group C and Group D posts have been done away with. These measures have saved time and money of lakhs of our youth.

Our Government by using modern technology is committed to provide a relief to those who suffer because of rigid rules and regulations, while undertaking these reforms and programmes, we have worked sincerely and without weighing the political costs. Our Government has ensured that benefits reach eligible beneficiaries and are delivered to them directly. Many services and benefits are being delivered to the people at their doorsteps or in their accounts. It has reduced corruption and cost of delivery and has eliminated middlemen in the process. Direct Benefit Transfer mechanism of India is the biggest such exercise in the world and is a global success story.

Sector wise funds allocation and share in budget:

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  • 1. Defence: In the previous budget for 2017-2018 funds allocated to defence sector was INR 267000 crores and the defence sector shared 12% from the total value of the 2017-2018 budget. In the current 2018-2019 budget defence sector shares the 12% from the total value of budget but the funds allocated to defence sector is INR 283000 crores, which ultimately proves that there is a rise in current budget made by the government. Defence sector is one of the most important sectors because government needs to constantly spend money on purchasing weapons, purchasing new technology, upgrading the current systems in Navy and Air forces for the safety of the nation. Looking at current war tensions with Pakistan and China, 12% or INR 283000 crores seems to be good amount dedicated towards the defence sector. Graphical representation of defence sector:
  • 2.Agriculture: In the previous budget for 2017-2018 funds allocated to agriculture sector was INR 56600crores and the agriculture sector shared 2.6% from the total value of the 2017-2018 budget. In the current 2018-2019 budget agriculture sector shares the 2.6% from the total value of budget but the funds allocated to agriculture sector is INR 63800 crores. Agriculture sector is one the most important sector in India as most of the population of India resides in the rural areas and 70% of the population residing in the rural areas undertake agriculture as their occupations. Looking at the total number of population residing in the rural areas 2.6% or INR 63800 crores seems to be little less. Graphical representation of agriculture sector:
  • 3. Education: In the previous budget for 2017-2018 funds allocated to education sector was INR 81900 crores and the education sector shared 3.7% from the total value of the 2017-2018 budget. In the current 2018-2019 budget education sector shares the 3.5% from the total value of budget but the funds allocated to education sector is INR 85000 crores. Education is the most important sector not only for India but also for the world because the country makes progress depending on how educated its population is. Government decreased the share by 0.2% but increase of INR 3100 crores. Looking at the current global competition government should have allotted more amount to education sector then what it is currently allotted. Graphical representation of education sector:
  • 4. Health: In the previous budget for 2017-2018 funds allocated to health sector was INR 53200 crores and the health sector shared 2.4% from the total value of the 2017-2018 budget. In the current 2018-2019 budget health sector shares the 2.2% from the total value of budget but the funds allocated to health sector is INR 54700 crores. Health sector is also the important sector for any economy but it has more importance in developing countries like India. Government will start new hospitals and will also start new medical colleges. In comparison from previous budget its share is reduced by 0.2% but increase off INR 1500 crores. Looking at the importance of Health sector 2.2% or INR 54700 crores looks less for health sector. Graphical representation of health sector:
  • 5. Transport: In the previous budget for 2017-2018 funds allocated to transport sector was INR 107000 crores and the transport sector shared 4.8% from the total value of the 2017-2018 budget. In the current 2018-2019 budget transport sector shares the 5.5% from the total value of budget but the funds allocated to transport sector is INR 135000 crores. Transport is the backbone for business in any economy Easy transportation increases ease of doing business and it also increases domestic and international trade. In comparison to previous budget it has increased by 0.7% or INR 28000 crores. Looking at the importance of transport sector in an economy INR 135000 crores is very good for an economy. Graphical representation of transport sector:
  • 6. Rural development:In the previous budget for 2017-2018 funds allocated to rural development sector was INR 136000 crores and the rural development sector shared 6.1% from the total value of the 2017-2018 budgets.
  • In the current 2018-2019 budget rural development sector shares the 5.7% from the total value of budget but the funds allocated to rural development sector is INR 138000 crores. Most of the Indian population resides in the rural areas; rural areas don’t have good infrastructure, transportation system, education system, etc. In comparison from previous budget its share has been reduced by 0.4% butt increase by INR 2000 crores. Looking at the population and need of people in rural areas the government should have increased the share of rural development in the budget. Graphical representation of rural development.

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