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Email this citationCIAO DATE: 07/06
Economic Growth and India's Future?
Joydeep Mukherji
CASI Working Paper
March 2006
Abstract
Recent optimism about India is based on the view that the country may finally be on a higher growth trajectory after more than a decade of halting economic reform. Spurred by a balance of payments crisis a decade ago that pushed the government of India to nearly defaulting on its foreign debt, a series of coalition governments have slowly deregulated the once most-regulated economy outside the communist world. Over the years, the government has enlarged the role of market forces, given more freedom to the private sector, and cut barriers to domestic and foreign competition. At the same time, India’s state governments have gained considerable autonomy from the central government, making India into the federal state envisaged in its constitution.
The Indian economy has grown around 6 percent per year since 1980, compared with an earlier average of 3.5 percent. During the last three years, the economy has grown at an annual average pace of 7.5 percent. The difference in growth rates is best captured by another statistic: it would have taken fifty-seven years for per capita income to have doubled at the pre-1980 growth rates for income and population but takes less than 15 years at the 2002-2005 growth rates.
