For the last two decades, India has been one of the front runners in the field of economic development and human development. The past decade has seen unprecedented economic growth and poverty reduction, which have been unmatched in any economic geography anywhere in the world. India's pace of economic development has been attributed to both internal factors and external factors. A rapid economic growth is the result of the country's vast resource base; its people are highly educated and have an entrepreneurial spirit that ensures the fast adoption of technological advancements. However, corruption and mismanagement by state officials have been a major road block to this process of economic development.
Over the past few years, the Indian government has taken vital steps to address issues of economic growth and human development such as the implementation of the Asian Financial Crisis Act in 1997, which forced banks to lend a little more money to potential borrowers, liberalization of agricultural policies to encourage investment, and liberalization of foreign trade. All these measures have had the desired effect on the economy. The share of investment in the industrial sector has also been a driving force behind the country's economic growth and thus the creation of thousands of jobs in the country. Furthermore, the creation of large number of small businesses has ensured employment for millions of people who otherwise were forced to work in industries that are not very conducive to employment.
Besides, the recent economic development in India has also seen the entry of a large number of multi-national corporations into the Indian market, which led to an increase in the outsourcing industry, which in turn resulted in an increase in employment opportunities for Indian citizens. In addition, over the last few years there have been some positive changes in the rules of the Indian economy which have resulted in greater levels of economic growth and poverty reduction. For instance, the changes in the inflation index, the policy of the central bank (including rate of interest), and tax structures have led to more accurate measurement of the price level and thus improved price competitiveness. Additionally, the changes in the methodology of statistics (the last 5 years) have led to improved quality of economic data and thus leading to better analysis of various economic aspects.
However, the most important thing for any government to achieve poverty reduction is to ensure that the policies it has been efficiently implemented. For this, the government needs to plan well in advance, especially in the area of identifying the cause of the disparity in income levels, and identifying appropriate policies and procedures to be adopted. For this, there has been much discussion on development aid and microenterprise. Microenterprise refers to the setting up of a limited company by a group of individuals, both private and public, who together consider themselves as investors, with shares in the company.
Microenterprise is considered a very efficient way of providing jobs to the poor people, while at the same time reducing poverty level significantly. The profit share of these investors are used to fund the activities related to poverty eradication. Thus through microenterprise, jobs are created for the poor people, which eventually results in enhancing the standard of living of all. The success of the microenterprise is measured by the difference in the income levels of the poor people and those of the other middle class.
Microcredit or the use of microenterprise funds for poverty-line projects is considered to be a great contribution towards the economic growth and development. In fact, the Millennium Challenge Foundation highlights microcredit as one of the tools of development that can help governments in creating an environment that is conducive for economic growth and development. However, the poverty line is not a fixed benchmark; it is determined after analyzing the current income level of the poor people. A good example for this is the increase in per capita GDP per year. If this measure is increased, poverty line will also go up.
Microcredit is considered one of the best tools in alleviating poverty and thereby encouraging economic growth and development. It helps the poor people to access monetary resources that are needed in their day-to-day lives. These monetary resources are then invested in businesses or other forms of enterprise. This process helps in lifting the burden from the poor people and encourages economic growth and development.
In the Millennium Challenge 2021 strategy document “Mickey's Country,” the Millennium Challenge Board recommended that countries in the South Pacific move forward with microenterprise development programs as part of their development strategies. In addition, the business community should consider supporting the development of small enterprises in the developing countries. The Microenterprise sector has already shown itself to be an engine for economic growth and development in the developing countries. The poor people depend on small enterprises for jobs and money, and microenterprise has given access to these resources to all sections of society. In fact, many governments have already started using microenterprise funds for the benefit of the poor people.
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