Problems Facing Indian Economy

Since 1991, the Indian economy has pursued free market liberalisation, greater
openness in trade and increase investment in infrastructure. This helped the Indian
economy to achieve a rapid rate of economic growth and economic development.
However, the economy still faces various problems and challenges, such as
corruption, lack of infrastructure, poverty in rural areas and poor tax collection rates.

GDP per capita (in 1990 Geary-Khamis dollars) (data range 1950-2003)

1. Unemployment

Despite rapid economic growth, unemployment is still an issue in both rural and
urban areas. The fast rate of economic growth has left unskilled workers behind, and
they have struggled to find work in growing industries. In 2017, the official
unemployment rate was just below 5%. However, a report by the OECD found over
30% of people aged 15-29 in India are not in employment, education or training
(NEETs). Livemint reported on March 6, 2017. WIth, little if any government welfare
support for the unemployed, it leads to dire poverty.

2. Poor educational standards

Although India has benefited from a high % of English speakers, (important for call
centre industry) there is still high levels of illiteracy amongst the population. It is
worse in rural areas and amongst women. Over 50% of Indian women are illiterate.
This limits economic development and a more skilled workforce.

3. Poor Infrastructure
Many Indians lack basic amenities lack access to running water. Indian public
services are creaking under the strain of bureaucracy and inefficiency. Over 40% of
Indian fruit rots before it reaches the market; this is one example of the supply
constraints and inefficiency’s facing the Indian economy.

4. Poor Infrastructure

Although India has built up large amounts of foreign currency reserves, the high
rates of economic growth have been at the cost of a persistent current account
deficit. In late 2012, the current account reached a peak of 6% of GDP. Since then
there has been an improvement in the current account. But, the Indian economy has
seen imports growth faster than exports. This means India needs to attract capital
flows to finance the deficit. Also, the large deficit caused the depreciation in the
Rupee between 2012 and 2014. Whilst the deficit remains, there is always the fear of
a further devaluation in the Rupee. There is a need to rebalance the economy and
improve the competitiveness of exports.

5. High levels of private debt

Buoyed by a property boom the amount of lending in India has grown by 30% in the
past year. However, there are concerns about the risk of such loans. If they are
dependent on rising property prices it could be problematic. Furthermore, if inflation
increases further it may force the RBI to increase interest rates. If interest rates raise
substantially it will leave those indebted facing rising interest payments and
potentially reducing consumer spending in the future

6. Inequality has risen rather than decreased.

It is hoped that economic growth would help drag the Indian poor above the poverty
line. However, so far economic growth has been highly uneven benefiting the skilled
and wealthy disproportionately. Many of India’s rural poor are yet to receive any
tangible benefit from the India’s economic growth. More than 78 million homes do
not have electricity. 33% (268million) of the population live on less than $1 per day.
Furthermore with the spread of television in Indian villages the poor are increasingly
aware of the disparity between rich and poor. (3)

7. Large Budget Deficit

India has one of the largest budget deficits in the developing world. Excluding
subsidies, it amounts to nearly 8% of GDP. Although it is fallen a little in the past
year. It still allows little scope for increasing investment in public services like health
and education.

8. Rigid labour Laws

As an example Firms employing more than 100 people cannot fire workers without
government permission. The effect of this is to discourage firms from expanding to
over 100 people. It also discourages foreign investment. Trades Unions have an
important political power base and governments often shy away from tackling
potentially politically sensitive labour laws.

9. Inefficient agriculture
 Agriculture produces 17.4% of economic output but, over 51% of the work force are
employed in agriculture. This is the most inefficient sector of the economy and
reform has proved slow.

10. Poor tax collection rates.

According to the Economist, India has one of the poorest tax to GDP rates in the
whole world. India’s tax revenue as a % of GDP is just 12%. Compared to an EU
average of 45%. This poor tax collection rate reflects widespread corruption, tax
avoidance and complicated tax rates. In 2017, Narendra Modi has sought to improve
tax collection rates and reduce complications through the introduction of a general
sales tax (GST) which involves a single tax rate – rather than tax rates applied
multiple times at different stages of production. (Modi’s tax gamble at Economist)

11. Business difficulties

According to the World Bank, the ease of doing business in India is poor. India ranks
130/190. Big issues for companies include

 Ease of enforcing contracts

 Dealing with construction contracts
 Paying taxes
 Trading across border

12. Inequality within regions

India’s economic growth has benefitted some regions more than others.
Technological hubs, such as Delhi and Mumbai have attracted higher paying jobs.
This has attracted an inflow of most mobile and skilled workers; this has created
congestion in these super-cities but failed to address the poverty of rural areas,
especially in the north east
Traditionally consumer education has been treated as being about avoiding the rip-offs, money
management and understanding credit. But many educators take the broader view that it should be
‗education for living‘ with the major emphasis on the economic, environmental, political and social
decisions that learners will make today, tomorrow and in the future. ―Consumer Education is a way
to balance the power between producers and consumers. Consumer Education aims to encourage
individuals to analyse and make value-based decisions at a personal level in terms of needs and
wants. It can also help individuals to make decisions which may be concerned with the wider
community. It is the transferability of skills conferred by consumer education which sets it apart
from consumer information-enabling people to use consumer information, so they ultimately make
informed decisions. Consumer education is basically an education which brings about behavioural
changes in a person who goes to market to buy anything. Consumer education is the process of
gaining the knowledge and skills needed in managing consumer resources and taking actions to
influence the factors which affect consumer decisions. Consumer education addresses four issues
i.e. consumer decision making economics, personal finance, rights and responsibilities. Consumer
behaviour and decision making have become prominent areas of research. Consumer behaviour in
everyday living is modified by complex micro and macro environment. The consumer buying and
consumer decision making are so complicated as a result of external influence that has to be
handled within an internal frame of reference which Page | 164 comes from consumer socialization.
The change in consumer education should be beneficial for the buyer. Now a day, the market is
glutted with a variety of goods and services which leave the consumer muddleheaded with how to
decide and for what and how much? The consumer is constantly exploited by the market men like
the producers, traders and the shopkeepers. The unfair and unethical malpractices adopted in the
market may be black marketing, food adulteration, under-weighing, misleading advertisements,
rising prices, false claims, lucky draws, zero percent finance schemes and a lot more which add to
the already existing problems of the consumers. The consumer is totally perplexed what to do and
what not to do. Ultimately deciding to buy which he doesn‘t need at all; though there is
advancement in education yet most of the consumers are unaware of their rights like right to safety,
right to be heard, to seek redress, to be adequately informed and consumer education. Most of the
consumers still don‘t utilize the consumer knowledge they have. So, keeping in mind the gravity and
need of consumer education the present study was planned. The growing interdependence of the
world economy and international character of many business practices have contributed to the
development of universal emphasis on consumer rights protection and promotion. Consumers,
clients and customer‘s world over, are demanding value for money in the form of quality goods and
better services. Modern technological developments have no doubt made a great impact on the
quality, availability and safety of goods and services. But the fact of life is that the consumers are still
victims of unscrupulous and exploitative practices. Exploitation of consumers assumes numerous
forms such as adulteration of food, spurious drugs, dubious hire purchase plans, high prices, poor
quality, deficient services, deceptive advertisements, hazardous products, black marketing and many
more. In addition, with revolution in information technology newer kinds of challenges are thrown
on the consumer like cyber crimes, plastic money etc., which affect the Page | 165 consumer in even
bigger way. ‗Consumer is sovereign‘ and ‗customer is the king‘ are nothing more than myths in the
present scenario particularly in the developing societies. However, it has been realised and rightly so
that the Consumer protection is a socio- economic programme to be perused by the government as
well as the business as the satisfaction of the consumers is in the interest of both. In this context, the
government, however, has a primary responsibility to protect the consumers‘ interests and rights
through appropriate policy measures, legal structure and administrative framework. In the good
olden days the principle of ‗Caveat emptor‘, which meant buyer beware governed the relationship
between seller and the buyer. In the era of open markets buyer and seller came face to face, seller
exhibited his goods, and buyer thoroughly examined them and then purchased them. It was
assumed that he would use all care and skill while entering into transaction. The maxim relieved the
seller of the obligation to make disclosure about the quality of the product. In addition, the personal
relation between the buyer and the seller was one of the major factors in their relations. But with
the growth of trade and its globalization the rule no more holds true. It is now impossible for the
buyer to examine the goods before hand and most of the transactions are concluded by
correspondence. Further on account of complex structure of the modern goods, it is only the
producer / seller who can assure the quality of goods. With manufacturing activity becoming more
organised, the producers / sellers are becoming stronger and organised whereas the buyers are still
weak and unorganised. In the age of revolutionised information technology and with the emergence
of e-commerce related innovations the consumers are further deprived to a great extent. As a result
buyer is being misled, duped and deceived day in and day out. Page | 166 Mahatma Gandhi, the
father of nation, attached great importance to what he described as the ―poor consumer‖, who
according to him should be the principal beneficiary of the consumer movement. He said: ―A
Consumer is the most important visitor on our premises. He is not dependent on us we are on him.
He is not an interruption to our work; he is the purpose of it. We are not doing a favour to a
consumer by giving him an opportunity. He is doing us a favour by giving an opportunity to serve
him.‖ In spite of these views consumerism is still in its infancy in our country, thanks to the seller‘s
market and the government monopoly in most services. Consumer awareness is low due to the
apathy and lack of education among the masses. No one has told them about their rights – to be
informed about product quality, price, protection against unsafe products, access to variety of goods
at competitive prices, consumer education etc. What consumerism lacks here are education and
information resources, testing facilities, competent leadership, price control mechanism, and
adequate quasi judicial machinery. The providers of goods and services have been reluctant to give
due consideration to consumer interest protection. In present situation, consumer protection,
though as old as consumer exploitation, has assumed greater importance and relevance.
Consumerism is a recent and universal phenomenon. It is a social movement. Consumerism is all
about protection of the interests of the consumers. According to McMillan Dictionary (1985)
―Consumerism is concerned with protecting consumers from all organisations with which there is
exchanged relationship. It encompasses the set of activities of government, business, Page | 167
independent organisations and concerned consumers that are designed to protect the rights of
consumers‖. 132 The Chamber‘s Dictionary (1993) defines Consumerism as the protection of the
interests of the buyers of goods and services against defective or dangerous goods etc.
―Consumerism is a movement or policies aimed at regulating the products or services, methods or
standards of manufacturers, sellers and advertisers in the interest of buyers, such regulation may be
institutional, statutory or embodied in a voluntary code occupied by a particular industry or it may
result more indirectly from the influence of consumer organisations‖133 As commonly understood
consumerism refers to wide range of activities of government, business and independent
organisations designed to protect rights of the consumers. Consumerism is a process through which
the consumers seek redress, restitution and remedy for their dissatisfaction and frustration with the
help of their all organised or unorganised efforts and activities. It is, in-fact a social movement
seeking to protect the rights of consumers in relation to the producers of goods and providers of
services. In-fact consumerism today is an all-pervasive term meaning nothing more than people‘s
search for getting better value for their money. Consumer is the focal point of any business.
Consumers‘ satisfaction will benefit not only business but government and society as well. So
consumerism should not be considered as consumers‘ war against business. It is a collective
consciousness on the part of consumers, business, government and civil society to enhance
consumers‘ satisfaction and social welfare which will in turn benefit all of them and finally make the
society a better place to live in. 132 The new Shorter Oxford Dictionary, 1993, p.490. 133
Encyclopaedia Brittannica, Micropaedia, Vol. III, p.108. Page | 168 The word ―Consumerism‖ is also
used in pejorative sense meaning ‗preoccupation with consumer goods and their acquisition.‘
However, its use in the present work is in a positive sense. There are various components of
consumerism. First and foremost is self-protection by consumers. Consumer must be aware of his
rights, raise voice against exploitation and seek redressal of his grievances. Consumers‘
consciousness determines the effectiveness of consumerism. It is the duty of the consumer to
identify his rights and to protect them. Voluntary Consumer Organisations engaged in organising
consumers and encouraging them to safeguard their interests is another important element of
consumer movement. The success of consumerism lies in the realisation of the business that there is
no substitute for voluntary self-regulations. Little attention from the business will not only serve
consumers‘ interest but will also benefit them. Some businesses in India have come together to
adopt a code of conduct for regulating their own activities. Regulation of business through
legislation is one of the important means of protecting the consumers. Consumerism has over the
time developed into a sound force designed to aid and protect the consumer by exerting, legal,
moral and economic pressure on producers and providers in some of the developed countries.

Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to
protect the interests of consumers in India. It makes provision for the establishment of
consumer councils and other authorities for the settlement of consumers' disputes and
for matters connected therewith also. The act was passed in Assembly in October 1986
and came into force on December 24 1986. The day is celebrated as consumer protection
day. Significance of the statute[edit]
This statute is regarded as the 'Magna Carta' in the field of consumer protection for checking the
unfair trade practices and ‘defect in goods’ and ‘deficiencies in services’ as far as India is
concerned. It led to the establishment of a widespread network of consumer forums and
appellate courts all over India. It has significantly impacted how businesses approach consumer
complaints and empowered consumers to a great extent.[1]

Consumer Protection Council[edit]

Consumer Protection Councils are established at the national, state and district level to increase
consumer awareness.[2]

Various Consumer Organisations[edit]

To increase the awareness of consumer, there are many consumer organisations and NGOs that
established, such as- (1) Consumer Education And Research Centre (Ahmedabad) (2) Bureau
Of Indian Standard (3) Federation Of Consumer Organisation In Tamilnadu (4) Mumbai Grahak
Panchayet (5) Consumer Voice (New Delhi) (6) Legal Aid Society (Kolkata) (7) Akhil Bhartiya
Grahak Panchayat

The Central Consumer Protection Council[edit]

The Central Government shall by notification establish with effect from (w.e.f) such date as it may
specify in such notification a Council to be known as the Central Consumer Protection Council

Consumer Disputes Redressal Agencies[edit]

Main article: Consumer Court
 District Consumer Disputes Redressal Forum (DCDRF): Also known as the "District Forum"
established by the State Government in each district of the State. The State Government
may establish more than one District Forum in a district. It is a district level court that deals
with cases valuing up to ₹2 million (US$29,000).[2]
 State Consumer Disputes Redressal Commission (SCDRC): Also known as the "State
Commission" established by the State Government in the State. It is a state level court that
takes up cases valuing less than ₹10 million (US$140,000)[2]
 National Consumer Disputes Redressal Commission (NCDRC): Established by the Central
Government. It deals with matters of more than 10 million.

Objectives[edit]
Objectives of Central Council[edit]
The objectives of the Central Council is to promote and to protect the rights of the consumers
such as:-

1. The right to be protected against the marketing of goods and services which are
hazardous to life and property.
2. The right to be informed about the quality, quantity, potency, purity, standard and price of
goods or services, as the case may be so as to protect the consumer against unfair
trade practices;
3. The right to be assured, wherever possible, access to a variety of goods and services at
competitive prices ;
4. The right to be heard and to be assured that consumer's interest will receive due
consideration at appropriate forums;
5. The right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers; and
6. The right to consumer education.
7. The right to choose.

Jurisdiction[edit]
Jurisdiction of District Forum[edit]

1. Subject to the other provisions of this Act, the District Forum shall have jurisdiction to
entertain complaints where the value of the goods or services and the compensation, if
any, claimed does not exceed rupees twenty lakhs.
2. A complaint shall be instituted in a District Forum within the local limits of whose
jurisdiction:-
a) – the opposite party or each of the opposite parties, where there are more than one, at
the time of the institution of the complaint, actually and voluntarily resides or carries on
business or has a branch office or personally works for gain, or
b) – any of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides, or carries on business or has
a branch office, or personally works for gain, provided that in such case either the
permission of the District Forum is given, or the opposite parties who do not reside, or
carry on business or have a branch office, or personally work for gain, as the case may
be, acquiesce in such institution; or
c) – the cause of action, wholly or in part, arises.
Consumer courts do not have jurisdiction over matters where services or goods were bought
for a commercial purpose.[3]
 Jurisdiction of State Commission[edit]
Subject to the other provisions of this Act, the State Commission shall have jurisdiction:-
a) – to entertain
i) – complaints where the value of the goods or services and compensation, if any,
claimed exceeds rupees twenty lakhs but does not exceed rupees one crore (R10
million); and
ii) – appeals against the orders of any District Forum within the State; and
b) – to call for the records and pass appropriate orders in any consumer dispute

Jurisdiction of National Commission[edit]

(a) to entertain—
(i) complaints where the value of the goods or services and compensation, if any,
claimed exceeds rupees one crore; and
(ii) appeals against the orders of any State Commission; and
(b) to call for the records and pass appropriate orders in any consumer dispute which is
pending before or has been decided by any State Commission. However, the Supreme
Court of India has held that the jurisdiction of National Commission under Revision
Jurisdiction is very limited and can only be exercised when State Commission exceeds
its jurisdiction, fails to exercise its jurisdiction or there is material illegality in the order
passed by State Commission.[4]

Consumer Court[1] is the special purpose court, in India, that deals with cases regarding
consumer disputes and grievances. They are judiciary hearings set up by the government
to protect the consumers rights. Its main function is to maintain the fair practices by the
sellers towards consumers. Consumers can file a case against a seller if they are defeated
or exploited by sellers. The court will only give a verdict in favour of the
consumers/customers if they have proof of exploitation, i.e., bills or other documents. If a
consumer does not have the proper documents required for filing a case then it would be
very difficult for the consumer to win or even file a case.[2] Types[edit]

1. National Consumer Disputes Redressal Commission (NCDRC): A national level court

works for the whole country and deals compensation claimed exceeds rupees one crore.
The National Commission is the Apex body of Consumer Courts, it is also the highest
Appellate Court in the hierarchy.
2. State Consumer Disputes Redressal Commission (SCDRC): A state level court works at
the state level with cases where compensation claimed is above 20 lac but up to one
crore.The State Commission also has Appellate jurisdiction over the District Forum.
3. District Consumer Disputes Redressal Forum (DCDRF): A district level court works at the
district level with cases where the compensation claimed is up to 20 lakhs.[3]