Economic Survey calls for strengthening invisible hand of markets

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News:The Economic Survey 2020 has illustrated enormous benefits from enabling the invisible hand of the market.

Facts:

Achieving $5 trillion economy:The survey has said that India’s aspiration to become a $5 trillion economy depends critically on:

  • Strengthening the invisible hand of the market.
  • Supporting it with the hand of trust.

About Invisible Hand:

  • The phrase Invisible Hand was introduced by Adam Smith in his book ‘The Wealth of Nations’.
  • It states that unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.
  • In other words,it basically assumes that an economy can work well in a free market scenario where everyone will work for his/her own interest.

Suggestions:The invisible hand needs to be strengthened by promoting pro-business policies to:

  • provide equal opportunities for new entrants, enable fair competition and ease doing business
  • eliminate policies that unnecessarily undermine markets through government intervention
  • enable trade for job creation and 
  • efficiently scaling up the banking sector to be proportionate to the size of the Indian economy.