Economics(Paper-4) - Shivaji University

4) Industrial Development : Another important function of the government is to
develop the economy industrially.The private sector does not have the resources and
the willigness to invest in basic and key industries. They may start consumer goods
industries. Thus, it is the government, which can set up basic industries to help the
private investor as well as the general public. Therefore, government play an important
role in economic development through strengthening the industrial base.
5) Agriculture : Agriculture is the main occupation of a majority of the people in
underdeveloped countries and it provides not only employment to large section of the
economy but also contributes as significantly to National Income. Recently budget of
India in 2012 more investment as well as credit facilities were allocated to have more
than 3% growth rate of agriculture. Thus new technique, new agricultural policy any
other support to agriculture can be undertaken only by the Government. Therefore
government plays an important role in economic development through investment and
development in agriculture sector.
6) Monetary and Fiscal Policy : The government also helps in economic
development by adopting various monetary and fiscal policies. By implementing
monetary and fiscal policies, the state is able to solve social, institutional and economic
problems in underdeveloped countries. Through monetary policy cost credit reduced
and its availability will be at ease.
Through Fiscal policy government tries to correct inequalities and income and
wealth. The government follows appropriate taxing, spending and borrowing policy to
expand internal market, reduce no-essential imports, fight the inflation and enable higher
level of savings and investment.
7) Foreign Trade : Developing countries exports primary products, hence they
face deficit in the Balance payment. This is due to terms of trade becomes to agriculture
sector and in the field and industrial section they are very much weak. Thus, the
government can solve the problems related to balance of payment and balance of
trade through appropriate export promotion and import substitution policy.
Thus it may have an economic development with the help of suitable foreign trade
policy.
8) Health and Welfare : Now a days due to globalization rural masses and poor
families in urban are facing problems like safe drinking water, housing sites, slums,
education, energy, nutrition, roads and transport system. It is the responsibility of the
government to solve these socio-economic problems in the country.There, the role of
government is to carryout certain welfare and anti-poverty programmes to achieve
economic development.
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