Why is our Indian Econiomy Inefficient ?

I THINK INDIAN ECONOMY IS NEITHER A SOCIALISTIC NOR A CAPITALISTIC  BUT IT IS A MIXED ECONOMY. THE SO CALLED ECONOMIC PARADOX " WHAT IS TRUE FOR ONE INDIVIDUAL IS NOT TRUE FOR THE WHOLE ECONOMY" HAS TO B PROPERLY ADDRESSED  UNTIL THEN WE ALWAYS  FIND MANY VICIOUS CYCLE AND U ALL KNOW THAT VICIOUS CYCLE CAN B BROKEN ONLY BY WAY OF CAPITAL FORMATION AND SOME OF  OUR CAPITALS ARE LYING WITH POLITICIANS AND THE REST IN SWISS BANK. OUR HUE AND CRY COUPLED WITH OUR SINCERE FEELING AS A TRUE CITIZEN THAT INDIAN ECONOMY IS STILL IN THE RECOVERY STAGE AND TO REACH THE STAGE OF "HIGH MASS CONSUMPTION PEOPLE LIKE US TO LEARN PATIENCE.

Arrow theory of choices and Arrow-Dabreu theory of 'self interest' do create more modern approach to increasing social welfare, then Paretto theory and Von Nuemanns 'risk aversion' theories do set in an initial phase of an economy in building its efficiency. 
The modern problems of subprime can be attributed to the incorporation of such theories if it was kept at old theories things wouldn't have been so catstrophic. The modern theories too incorporated the contrarian theory of Kahnemann and Trvesky of 'risk tolerence' instead of 'risk aversion'.
Here in the modern times we saw the Hobsian tyrant acting slyly in allowing the modern theories of 'self interest' and 'choices based on risk tolerences' play havoc on society.
A Hobsian tyrant is the government and they should work towards building and economic agent in each citizen, politcal will should formulate towards wealth creation for the nation and endowment for citizen under efficient facilitation and infrastructure. 
Handling isolated events may not solve the problem en mass, the whole economy has to be cosnsidered as a system and worked through using the present conscious knowledge about economic and social outcomes. Systemic risks need be reduced through 'insurance curves', edgeworth boxes and sharing of risks in transactions which are all alien to our citizen. Thanks.

hello all,
I am afraid if we discuss these issues from this end, we just follow and react on reality. 
http://www.businessinsider.com/demographics-energy-and-the-end-game-exponential-functions-2011-4#comment-4dbe4f8ecadcbb4873090000
I would rather act instead of react.
While we discuss this problem, our problems double by the day as long as more than 200.000 children get born every day.
Before we set up a reactive strategy, I recommend we act before it is too late.
We should not wait for the military to act before we do.

Mind blowing sir, thank u

THE PARETO LAW (80/20) . THE MAJORITY OF YOUR PRODUCTIVITY IS ACCOUNTED FOR BY A MINORITY OF YOUR ACTIVITY.

THE PARETO ANALYSIS  IT HELPS SET PRIORITIES ON WHICH PROBLEMS TO SOLVE FIRST BY SORTING OUT THE FEW REALLY  IMPORTANT PROBLEMS FROM THE MORE NUMEROUS BUT LESS IMPORTANT ONES. IT IS USEFUL FOR DEALING WITH CHRONIC PROBLEMS

Paretto assumes that the world is perfect.  And everybody sees everything in the same way.  This is one of its greatest weaknesses.  The world is imperfect and everybody sees the samething in a different way depending upon his status - whether he is a producer, consumer, Government, Middleman, Commoner, Onlooker, etc.  What is perfect for one party is not perfect for all the others.  Theoretically, it is very good but conceptually, it is very much impractical.  The world is not a perfect science where there are no assumptions and dynamic variables.

With glorious past of 60 plus years as a democratic nation, I would say with exposure of so many scams,  It is far fetched as compare to the proceeding of the present UPA Government.  Secondly, everybody's arms are tied and every next hirarchy is tight lipped.  So there is bound to be inefficieny.  It has always been the experience of facing the flak or taking or hearing the voice at the receiving ends. where one has to get the work done with any official keeping the inefficiency factors in mind.  If you go further into it, its all the more worse.  you take Water supply dept.  Telephone dept. Drainage dept.  last but not the least internet service. It is induced in every pulse we come across,  Overall the great economists of this country needs to follow the footstep of Nobel prize winner Amartya sen,  where litracy factor is the point of issue. But,  still you will face the same consequence of inefficiency through out as we would be coming across the next generation of species with more expensive cost.  It is beyond the danger levels.

PROPER UTILIZATION OF RESOURCES IN THE BEST POSSIBLE MANNER.THE PARETO OPTIMAL THEORY  WHICH IS OTHER WISE KNOWN AS WELFARE ECONOMICS HAS CONCERNED ITSELF MOSTLY WITH POLICY ISSUES ARISE OUT OF ALLOCATION OF RESOURCES WITH THE DISTRIBUTION OF INPUTS AMONG THE VARIOUS COMMODITIES AND THE DISTRIBUTION OF COMMODITIES  AMONG THE VARIOUS CONSUMERS. THE ITALIAN VILFERDO PARETO SAYS " ANY CHANGE WHICH HARMS NO ONE AND WHICH MAKES SOME ONE BETTER OFF  MUST B CONSIDERED TO B AN IMPROVEMENT. PLEASE NOTE INDIAN POLICIES ARE DONE BY ANOTHER ITALIAN. I CAN SAY THE PRESENT INDIAN ECONOMIC SCENARIO IS ARROWS IMPOSSIBILITY THEOREM. THE THEOREM GOES ON TO SAY THAT ONE WILL B BETTER OF BY MAKING OTHERS WORSENING OF .

Excellent Analysis Mr. Cherian.  What's the way out to correct this anamoly?  Inequity and subsidies based on casteism and classes are two inseparable things from this country. To reduce this gap, we need to abolish caste systems, raise education bar, covering every citizen of this country, and distribute wealth stashed away by dubious means in foreign banks, etc. and to do that we need to strongly come up with stringent regulations regarding money flow within and outside the country, withdrawing Rs.500 and Rs.1000 notes by giving grace period to surrender legitimate money to the RBI, which would help curb black money after a certain period.