New Economic policies: oceans of poverty and islands of wealth Essay : The actions of the government in setting interest rates, budgets, national ownerships, labor markets, and government interventions in the economic fields are known as economic policies. The economic policies are directed to achieve four significant goals. These include promoting economic prosperity, encouraging business development, ensuring employment and market stabilization. In order to achieve these goals, governments make use of policy tools that are under the influence of the government. These comprise money supply, interest rates, exchange rates, tariffs, and regulationoflabor market. New economic policies refer to the economic relaxation or liberalization of significant tariffs and creating markets for foreign and private players thereby reducing taxes to increase the economic progress of the country.
Objectives of new economic policies:
- The prime objective is to plunge the economy into the pool of globalization and add a new edge on market orientation.
- To reduce the rate of inflation by implementing new economic policy
- To achieve economic stabilization and transfer the economy in to a market economy by eradicating unnecessary stringent
- To permit international flow of goods, capital human resources, technology, and other services.
- To increase the participation of private players in various sectors of the economy.
Oceans of poverty:
The New economic policies besides creating islands of wealth also led to the creation of oceans of poverty. A few disadvantages are listed below
- The new economic policiesmainlyfocus on the corporate sectors neglecting the well being of the agricultural sectors and small-scale industries on which majority of the population solely depends
- It is largely dependent on the foreign investments in various sectors of the economy
- As a result of the new economic policy the consumer price index or CPI has increasedover the last few years
- It led to inequal privatization due to the resistance from the labour unions
- The government has reduced the fiscal deficit it due to investment policy
- The expenditures that are mostly non planned along with the fiscal deficit have not been reduced.
Islands of wealth
- The achievements of the New Economic Policy that is responsible for creating islands of wealth are discussed below
- The rate of GDP growth increased along with an increase in Gross rate of return since 1997 onwards.
- The wholesale price index declined as an impact of new economic policy resulting in a decline in the inflationary trend.
- The foreign exchange reserves increased after the new economic policy came into power
- There was significant improvement in the index of industrial production
- In the same way, the growth of exports rates increased under the impact of new economic policy.
Conclusion
In conclusion, it can be said that the New Economic Policy or NEP requires to achieve its objectives completely as it had created other problems pertaining mostly to inequal privatization, fiscal deficit policies, consumer price index and special focus on the corporate sectors. Hence, the government should enact the role when it comes to the implementation and formulation of new economic policies and it should aware the nation about the strategies, they will carry out to achieve the goals.
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