ANALYSE THE GNP LIST OF INDIA DURING LAT 5 YEARS AND PREPARE A NOTE ON IT
Answers
Explanation:
India has achieved much in the last decades. Yet an economic deceleration in the past few quarters has generated worried commentaries about India’s growth potential. However, our analysis of nearly five decades of data finds that India’s long-term growth process is steady, stable, diversified and resilient. Does this lay the groundwork for a more sustained 8% growth in the future? Yes, possibly, but more is needed. Let us elaborate.
First, India’s long-term economic growth has steadily accelerated over a fifty-year period, without any prolonged reversals. Thus, while growth averaged 4.4 percent a year during the 1970s and 1980s, it accelerated to 5.5 percent during the 1990s-early 2000s, and further to 7.1 percent in the past one decade. The acceleration of growth is evident not just for aggregate GDP, but even more strongly for per capita GDP. The average pace of per capita growth was 5.5 percent a year in the last decade. Interestingly, when compared with some of the world’s largest emerging economies, this steady acceleration of growth stands out as being unique to India.
Yet, our analysis shows that despite the growth rate recovering, attaining a growth rate of 8 percent or higher on a sustained basis would depend on an effective structural reform agenda. Over the last five decades, there have been six episodes of high growth, about once in each decade, when growth rates exceeded 8 percent. Most such episodes lasted only one to two years, and corrected sharply in the years thereafter. In some of these cases, high growth was due to a low base impact of slow growth in previous years followed by unusually good agricultural output (1976, 1989); in others, it was due to an unsustainable fiscal deficit or another macroeconomic policy (such as in 2010–11). The only durable episode of growth sustaining at levels above 8 percent for 5 continuous years is the one that lasted from 2004 to 2008. This episode benefited from the combined effect of important reforms undertaken in the 1990s and early 2000s, and from an unusual buoyancy in the global economy and easy global liquidity, leading to high sustained growth across sectors and all components of GDP.
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