Indias Economic Growth - Research Paper Example

Economy of India Task India’s economy isranked the tenth largest worldwide by nominal Gross Domestic Product (GDP) and in relation to purchasing power parity, it is ranked the third. The economic state of the country has developed at a regular yearly rate of nearly nine per cent for the duration of 2003 to 2008. However, it came down to 6.8 per cent in the throughout 2008-2009 during the start of the global crisis. The economy later picked to a rate of 8 percent in the course of 2009-2010 and an 8.9 percent during the first half of 2010-2011. In the last five years, the economy of the country has not changed. India’s existence in the economy remains widespread through enterprises governed by the state, and wasteful subsidy programs that bring about constantly high budget arrears. The lack of a regulatory and legal framework that works well, a feeble rule of statute worsened by bribery in numerous areas of economic doings challenges the development of a more energetic sector. India is still an unfree economy nation. A look at its present economy enables one to come up with weaknesses and strengths of the economy of India. To start with the strengths, India’s demographics are favorable. The country still has an encouraging rate of birth signifying that the workforce will carry on growing for the predictable future unlike in China. Secondly, there is ample possibility for rises in efficiency. India’s infrastructure is pathetic in places that even temperate developments might lead to momentous improvements in the industrious ability of the economy (Jain, 9). Thirdly, the country is well positioned to benefit from outsourcing and globalization. A heritage of the British kingdom is that India is made up of the one of the biggest number of English speaking inhabitants all over the globe. This stands as an economic growth expected to carry on in the future. For another thing, India has positive development forecasts. A recent study done by Datt and Ravallion, (100), indicates that the growth rate of India is likely to be at a maintainable 8 percent until the year 2020. Nevertheless, it is worth noticing that this presumed development rate would come up with several supply guidelines like improvements in training and education and workforce market deregulation. Lastly, India is likely to have a relative advantage in the workforce intensive industries. Also, the country is likely to benefit from the liberalization of unrestricted trade in modern years. Besides these strengths, there also exists weaknesses in the economy of the country. Firstly, criminality, corruption and political instability in politics might be the main weakness. India requires cleansing in its politics so as to get rid of unprincipled and irresponsible politics playing with individual’s mandate. Political bribery, low respect for regulation, rules and laws provides immoral role representations to individuals. Secondly, recession, the economic crisis and economic instability might lead to minimal developments in growths. Therefore, a need for cleaning the economy is required so as to achieve full development in the economy. Cleansing can be done through concentrating on reliable economy strategies, inspection of fraud at all levels, murky economy, and economic crimes. Task 2 India has developed gradually in the past decades due to the effective application of its planning process. India objective to the growth strategy has been to form a socialistic design of society by economic development with lessening of poverty, self-reliance and social justice. These goals were to be attained within a self-governing political framework by means of a mechanism of a diverse economy where both private and public sectors co-exist. India instigated planning for nation-wide development in economy with the formation of the commission for planning. The purpose of the foremost five-year plan between the years 1951-1956 was to increase national savings for development and to assist the resurrection of the economy from the colonial rule. The big break came with the second phase of the five-year plan. In this phase, more emphasis was placed on the growth of heavy industries and envisioned a prevailing role in the economy of the public sector. The business role of the country was induced in order to advance the industrial sector. Powerful pinnacles of the economy were handed over to the public sector. The industry policy objectives included: state governed economy; minimization of inequalities in the wages; high development rate; reduction of dominance by the foreign states; domestic self-reliance; balanced regional growth; avoidance of concentration of financial power; boosting small scale business; and strengthening of original capacity. The policy makers and planners recommended the necessity for using an extensive diversity of instruments such as allocation of investment, license, among other regulations by the state to steer Indian business growth on a closed financial basis. The plan is underlying the first three strategies presumed that once the process of developments becomes established, the institutional alterations will make sure the reimbursements of development dribble down to the less fortunate. However, in the early seventies doubts about the efficiency of dribble down method and its capabilities to drive out poverty (Ravallion, 83). Further, the developments themselves produced by the deliberated approach were too fragile to form sufficient surpluses- a requirement for the dribble down method to be effective. Due to this, agricultural growth stayed inhibited by obstinate institutional conditions. Although, the development attained in the first three five-year strategies was not unimportant, however, it was not adequate to meet the objectives and aims of growth. They conveyed the feebleness of economic plan into view. The fifth plan (1974-1979) experienced a shift in policy. Its courses were corrected to emphasize on the development of redistribution. To hasten the process of manufacturing and to make it parallel with modern realities, a minor form of economic liberalization was founded in the mid-1980s. Moreover, three significant committees were formed in the early 1980s. The Narsimhan Committee was focused on the shift to fiscal controls from physical controls. The Sengupta Committee focused on public sector while the Hussain Committee on trade strategy. The reason behind this was to reorient the financial policies of India. Due to this progress of deregulation was seen in the 1980s. The delicensing activity involved two processes. The first one saw 32 collections of industries being delicensed devoid of any asset boundary. The second one was in 1988, which saw all industries being released from licensing exclusive of a negative list of twenty-six industries. Therefore, entrance to the marketplace was made easier but the exit remained sealed and closed (Pye, 156). Task 3 The worlds most populated nation are China and India and have much more in common. According to Huang and Khanna, (76), the common things between the two nations is that: Both countries have over one billion inhabitants; also each of them has sustained an annual report on the GDP development rate over the previous decades that is in the midst of the world’s highest – 7% for India and 9% for China; and both of them have stood amongst the world’s most prosperous in withstanding the storm of the latest global stagnation. However, a closer view discloses unambiguous demographic contrasts amongst the two countries that will be more noticeable in the future. This dissimilarities hold repercussions for India’s and China relative financial prospects and point to severely non-similar challenges for each country to build and sustain on recent economic development. Two dissimilarities among India’s and China’s demographic pathways mostly stands on both nations’ forthcoming prospects: trends in resident’s growth and alterations in age distribution within their population. The population of India is developing more quickly than China. Currently, India’s population is smaller than that of China, but the rate of growth in population is 1.55 percent annually, which is more than even double the percentage of China which is at 0.66. It is projected that in 2025 the population of India will be similar to china’s current population of 1.4 billion and it is expected to go past it and become the world’s most heavily populated country. Due to this the economic status of India will be higher since majority of its population will be a productive population. The dissimilar growth rates are brought about mainly by variances infertility. The fertility rate of China has been lower than that of India because of the one-child policy in the nation. In 2010, China’s fertility rate was at 1.54 children per woman and India was at 2.65. This means that on average an Indian woman bears over and above one child than the Chinese woman. Due to these policies, china’s population is older than the India’s population and is starting to age fast. However, by the year 2035, the population of India is said to stabilize at 2.1 children per woman. The growth performance of China in the past 25 years has been tremendous, however in present time; India has developed as many industrialized economies of East Asia. India has topped in service-producing industries while it is still lagging behind in the manufacturing industries. Typically, China is exceeding India by far, but, majority of china’s population comprises of old people, and this is a threat to its economy. Old people are prone to dementia, which is forgetfulness, and also a couple have four people to take care of. This is a burden, and that’s why India is likely to be ahead of them financially in the coming days (Scott, 22). Task 4 The financial prowess of India as one of the drivers of Asia’s present resurgence is anticipated progressively to define world-wide development visions for the medium and near term. The implications are of specific concern to the adjacent low-income nations. The financial dynamism of India has led to some effects in the growth predictions of their low-income Asian nationals. Alternatively, the upsurge in Indian exports does not seem to have minimized the exports of the low-income Asian countries. However, in a majority of the cases where Indian exports have experienced a main increase, their performance in export has continued to be modest. Additionally, after the emergence of India as one of the giants in Asia economically, majority of its low-income neighboring countries have been unsuccessful in increasing their exports to the country. Despite the fact that a fresh set of Asian economies were winning off during the nineties and eighties, a majority of other southeast and south Asian economies stayed separate from this growth pole, while struggling to uphold moderate developments and gradually moving near economies steered by industry instead of agriculture. Some examples of these low-income states include Mongolia, Pakistan, Sri Lanka, Cambodia, Bangladesh, and Vietnam, among others. Notwithstanding the circumstance that these nations have diverse standard conditions and varied levels of capability of economic incorporation, they share some features when it hail from dealing with the development of its large neighbor, India. In short, India rise economy wise, has had varied consequences to its neighbors (Kotwal, Ramaswami, and Wadhwa, 1155). To start with, the rise has led to the crowding of the low-income Asian countries in the third markets. Secondly, the exporting of these low-income countries has become more competitive through the provision of low-priced intermediary products. Additionally, India’s rise has brought about new prospects to these nations by the development of their local markets. Also, the rise of India has made other developing nations more tenable as podiums for manufacturing for the Indian markets and assimilating them into supply chains that manufacture goods for the worldwide economy. The accomplishments of India in the post-reform period could also have improved the confidence in business through the region, and took part in the implementation of strategies that affected the low-income Asian countries positively. Lastly, South Asian countries have seen to take advantages from the rapidly growing economy of India. These countries suggest that enhanced real and economic flows might offer a resilient foundation for integration, thus improving the advantage of development by the financial and trade channels. Addressing the weaknesses in trade restrictions, business environment and infrastructure might make a difference. Bearing in mind that even with low financial and trade linkages India’s development are positive, and there is a requirement to have self-assurance that improved intra-south Asian financial and trade linkages might provide stronger results, reliable with what has been obtained in other regions like China (Gupta, Lal, and Zainab, 82). Work cited Datt, Gaurav, and Martin Ravallion. “Is India’s Economic Growth Leaving the Poor Behind?” Journal of Economic Perspectives 2002: 89–108. Web. Gupta, B.M., Kashmiri Lal, and A.N. Zainab. “India’s Collaboration in Science and Technology with Southeast Asian Countries.” Malaysian Journal of Library and Information Science 7 (2002): 69–86. Web. Huang, Yasheng, and Tarun Khanna. “Can India Overtake China?” Foreign Policy July-Augus (2003): 74–81. Web. Jain, Vishal. “Indian Entrepreneurship and the Challenges to India’s Growth.” Ivey Business Journal 75 (2011): 9–11. Print. Kotwal, Ashok, Bharat Ramaswami, and Wilima Wadhwa. “Economic Liberalization and Indian Economic Growth: What’s the Evidence?” Journal of Economic Literature 2011: 1152–1199. Web. Pye, Lucian W. “India: The Emerging Giant.” Foreign Affairs 2008: 156–157. Web. Ravallion, Martin. “A Comparative Perspective on Poverty Reduction in Brazil, China, and India.” World Bank Research Observer 26 (2011): 71–104. Web. Scott, David. “The Great Power ‘Great Game’ between India and China: ‘The Logic of Geography.’” Geopolitics 2008: 1–26. Web. Read More