Macroeconomics Case Study

The Burgeoning Indian Economy: Signs of Overheating

OR

Abstract:
The Indian economy, for most of its independent history, was under the strangles of the Licence Raj. But it opened up in 1991. Subsequently, its economic activity was integrated with the global economy, and record growth ensued. However, by mid-2000s, Indian economy is rattled as most economic variables – such as stock indices, interest rates and fiscal deficit – were displaying negative signs. Moreover its economic growth mostly rode on the success of liberalising several sectors, at the cost of others sectors. Policymakers would have a tough time tackling these economic imbalances.

Effects of economic reforms on various sectors and their effectiveness can be thoroughly discussed through this case. Economic impact of monetary and fiscal policies needn’t be neglected.

Pedagogical Objectives:

• To analyse the impact of India’s various 5-year plans on economic growth
• To understand the factors responsible for high economic growth rate
• To understand the implications of multiplier and accelerator effects on the growth rate
• To analyse the government’s policies (monetary and fiscal policies) to achieve a balanced economic growth
• To debate whether Indian economy is over heating.

Keywords : Indian Economy, Multiplier Effect, Accelerator Effect, Crowding Out Effect, Interest Rates, Fiscal Policy Case Study, Exchange Rates, Human Development Index, Economic Reforms and Growth, Public and Private Investment, Economic and Social Impacts of Rapid Growth, Five Year Plans, Monetary Policy, Fiscal Policy

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