Notes on India's Economy

 INDIA - http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-india-the-road-ahead

• ·       Economic powerhouse
• ·       Accelerated sustained healthy growth for last 2 decades
• ·       Global financial crisis was short lived, recovered rapid – reserve bank of India and Government put in place stimulate polices and so did Government.
• ·       Government lucky; already had a fiscal policy, that was stimulatory – big reason of recovery
• ·       Economic driven by domestic source, unlike neighbours who relay on exports.
• ·       Benefited India in the crisis, as they looked inwards for sources of growth, insulated country from crisis
• ·       Success –turn around in early 90 free market principle and liberalising government regulations
• ·        Government regulations need to be reduced that have prevented industry from realising the dynamic and same time main ting regulations – not copying west directly insularity
• ·       Need to able import ideas and adapt, but not be held back by old notions of orthodoxy
• ·       Traditional village farming to modern industry – famous film industry – although high tech and service industry popular
• ·       Different path of development – tradition is agriculture culture, then industry, and then service.
• ·       India skipped industry, not necessary good – happened because of strains in operating environment – service sector much less tightly controlled had to take upon burden had space to expand
• ·       Urgent call to rebalance global growth by world leaders
• ·       Largely domestic, 15% exports only
• ·       We should increase external sector eg exports
• ·       We should Shift from service to manufacturing to create job
• ·       Infrastructure (roads, access to water) needs to be improved and enhancing financially structure
• ·       Infrastructure  (electricity) holding back manufacturing – difficulty moving goods – key focus of economy policy, Gov. made it a priority
• ·       Rate of inflation highest among emerging market
• ·       Why problem? Cyclical recovery- this is a chronically sustained economy have stronger demand than supply – chronic excess demand - hard to transport supply – price pressures exaggerated
• ·       Problem of high deficit and debt level leaving very little resources on economic and social development
• ·       Poverty and lack of education – problem
• ·       Some decline in poverty, still accounts 1/3 of worlds poor – 400 m
• ·       Has to make sure pull out which China has done
• ·       Widening gaps more concern, as poverty no increasing
• ·       Growing no of youth – 700 m under age of 35
• ·       Positive democratic – youngest pop up to 2050 largest working term population – unto 64 years old
• ·       G20 role – will start influence and shaping
• ·       Growth in GDP and democratic makes power inevitable