Explain clearly four ways by which the State can promote economic growth and development.
1. Promoting capital formation: Capital formation is a fundamental requirement for economic development. Private savings are very low in the underdeveloped countries in view of the low income of the people. Therefore, there is a need for generation of savings by the government Developing countries have to depend primarily on government to mobilize domestic resources during the early stages of economic development. The government has a major role to play in promoting capital formation.
2. Development of Economic Infrastructure: Provision of economic infrastructure is mostly the responsibility of the government. Key economic services, called infrastructure, like railways, road transport, communication network, roads, bridges, irrigation works, gas, electricity, etc. are very essential for economic development. The absence of infrastructure can retard economic development.
3. Politics of the welfare state: The government is also required to undertake the responsibility of the welfare state. The welfare state is a society in which the government protects the individuals against various contingencies so as to guarantee people a minimum standard of living. The government provides various types of assistance to the people as part of the policies of a welfare state, such as pensions, accident insurance, health insurance etc.
4. Population policy: Population is growing rapidly in most of the underdeveloped countries. The government can evolve an appropriate population policy to control population growth. All the development efforts will be futile if the growth in number is not checked. To increase the per capital income and to improve the standard of living of the people the rate of population growth must be checked. The state can evolve an appropriate population policy by giving priority to family planning programme.
1. Promoting capital formation: Capital formation is a fundamental requirement for economic development. Private savings are very low in the underdeveloped countries in view of the low income of the people. Therefore, there is a need for generation of savings by the government Developing countries have to depend primarily on government to mobilize domestic resources during the early stages of economic development. The government has a major role to play in promoting capital formation.
2. Development of Economic Infrastructure: Provision of economic infrastructure is mostly the responsibility of the government. Key economic services, called infrastructure, like railways, road transport, communication network, roads, bridges, irrigation works, gas, electricity, etc. are very essential for economic development. The absence of infrastructure can retard economic development.
3. Politics of the welfare state: The government is also required to undertake the responsibility of the welfare state. The welfare state is a society in which the government protects the individuals against various contingencies so as to guarantee people a minimum standard of living. The government provides various types of assistance to the people as part of the policies of a welfare state, such as pensions, accident insurance, health insurance etc.
4. Population policy: Population is growing rapidly in most of the underdeveloped countries. The government can evolve an appropriate population policy to control population growth. All the development efforts will be futile if the growth in number is not checked. To increase the per capital income and to improve the standard of living of the people the rate of population growth must be checked. The state can evolve an appropriate population policy by giving priority to family planning programme.
