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Macroeconomics Case Study

Case Title:

Indian Growth Paradox

Publication Year : 2010

Authors: K Ray, S Ghosh and P Krishnan

Industry: General Business


Case Code: MAC0026IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Since the first half of the 1990s, when India started liberalising its economy, it started opening up most of the sectors for foreign direct investment. Export was given prime importance. Structural change in the economy was evident with the boom of the service sector. Consequently, GDP grew steadily, foreign investments increased and foreign exchange reserve was in a stable position. Economists predicted that by 2050, India would become the third largest economy in the world. However, although there was sharp improvement in economic performance, India faced a growth paradox. The contrast was evident as even basic amenities were not provided to a large proportion of its citizens. The benefits did not trickle down to the majority of the population. Crumbling infrastructure and social impoverishment were becoming major obstacles for the future development of India. In such a contradictory situation, whether the Indian growth was sustainable or not was a question that needed to be answered.

Pedagogical Objectives:

  • To analyse the evolution of the Indian economy since her independence until the twenty first century.
  • To discuss the factors that led to the spectacular performance of the Indian economy at the dawn of the twenty first century.
  • To highlight the socio-economic conditions of the country in the twenty first century.
  • To analyse whether the steep growth would be sustainable in the long run.

Keywords :  Growth trend of India, Five-year plans, Import substitution strategy, Hindu growth rate, Current account deficit, Trade deficit, Process of liberalisation, Globalisation, Foreign exchange reserve, Consumer price index, Poverty line, Human development tax, Corruption, Infrastructure, Rural finance

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