Government plays a vital role in protecting its economy. Governments use different
methods to protect the local investors and its economy. This paper discusses the intervention
methods used by the government of India.
Government intervention in India
Indian Government uses various methods in stabilizing the country economy as well as
protects the local businesses from exploitation by the foreign investors. The government of India
uses Fiscal measures to reduce revenue deficit. They strongly control their expenditure. For
example, the government of India, in 1984, reduced the public expenditure and avoided fresh
recruitment for a period of seven years. It also reduced the number of ministries to further reduce
its expenditure as a move to control fiscal deficit.
The government also uses monetary policies such as the RBI policy that uses general and
selective control of credit. The government uses this policy extensively. The government uses
the policy to control the bank credit to avoid inflation on the sensitive goods (Swinnen 4). This
way the government controls the available credit for the commercial goods.
The government also uses the supply management intervention method to control the
Indian economy. This method relates to the supply volumes and supply distribution system.
Through this method, Indian government controls the prices of the basic commodities such as
oil, rice, wheat, and sugar among other commodities highly consumed in India. To achieve this,
the government set maximum prices for the products on both wholesale and retail. The
government also sets the minimum procurement price for the farm outputs to protect the farmer’s
interest. The government also uses a dual price system to avail the basic products...