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India & the World Economy: Topics to cover

Evolution • The World Economy:
Growth Transitions - Growth: recent trends & issues
- Evolution & transformation
Structural Transformation - Changing economic & business landscape
Current Trends & Challenges - Challenges & Opportunity
• India’s Experiences & Exposures
– Growth Performance & Growth Phases
– Structural Transformation
– Development Planning & Major Policy Shifts
– Indian Economy: Turnaround & Challenges
– Growth vs Development Experiences: The Paradox

1 2

Overview of the World Economy Distribution of World GDP & Population (%)
• Growing Interdependence: World Economy was
increasingly intertwined over past half century
• Current Pandemic: Massive disruptions, uncertainty,
Return protectionism
• Growth Performance: growth of world trade < world GDP,
more complex than before, uneven growth across & between nations
• Faster convergence: with advanced richer economies
(EMEs & developing countries - % share in world GDP > population)
• Post-Global Economic turbulence: more EMEs are
mired in the middle income trap
• Future economic order: convergence of large developing
economies led by East-Asia & India
• The way ahead: early recovery (DCs), back to past growth &
maintaining high growth (EMEs & developing countries), Asia

3 4

Structural Changes in the World Economy Growth of GDP & GDP per capita (%) : Major Regions
• Profound changes the world economy:
– associated with structural transformations around 1980s,
– Impact on the process & outcomes on growth & dev.
• Key Factors for Changes:
– momentum of globalization, rapid internationalization of finance,
global financial crisis,
– technological revolution – ICT, growth of services, capital flows
– collapse of communism, return of entrepreneurial capitalism,
– Growth of global trade, investment, production
– Shift in production, investment, Mnf., exports, economic power
– growing economic significance of developing countries driven by
rapid economic growth, value added - transforming lives of many
• Challenges:
– unequal economic growth & outcomes across & between countries
– process of catch up by the latecomers or laggards
– Growing new protectionism & de-globalization

5 6

Structural Changes & Eco Diversities: Next-14
• Differences in economic size: small (Malaysia, Taiwan and Chile),
medium(South Korea, Thailand, Turkey, Egypt, South Africa, Argentina and
Mexico), large (China, India, Indonesia and Brazil).
• Different resource endowment settings: resource-rich & land-abundant
(Argentina, Brazil, Chile, Mexico, South Africa and Indonesia), resource-poor &
land scarce (China, India, South Korea, Taiwan, Thailand and Egypt), resource-
rich & land-scarce (Malaysia).
• Different growth drivers: primary commodities or natural resources as basis
for Mnf. (Argentina, Brazil, Chile, South Africa & Indonesia), cheap labour (China,
India, Malaysia, South Korea, Taiwan, Thailand, Turkey, Egypt and, to some
extent, even Mexico).
• Different market & resource focus: external markets & external resources
critical in industrialization (Argentina, Chile, Mexico, Indonesia, Malaysia, Thailand
and Turkey), domestic markets & domestic resources (Brazil, China & India),
external markets & domestic resources (S Korea, Taiwan).
• Different transitions reflected in patterns of structural change: labour
shift from Agrl. to Mnf., from low to high productivity employment (South Korea &
Taiwan, followed by Malaysia & China), others failed (India)
7 8
Growth Potential in Developing Countries
• Economic determinants of growth for developing countries:
• Large population – possible source of growth,
• Low levels of income - possibilities of growth are greater.
• Demographic characteristics - high proportion of young
people - increase in workforce & savings rates - conducive
to economic growth,
• Provided education spreads across society to create HD
capabilities among people.
• Low wages - an important source of competitiveness for
some time to come
• Policy making & Coping with constraints:
– endogenous constraints - country-specific (local conditions,
institutions, governance)
– exogenous constraints - example is climate change
– Specific policy as one-size-does-not-fit-all - alternatives paths to opt
9 10
Ratio of world merchandise trade volume growth to
world real GDP growth, 1981-2018
11
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Structural Changes & Models of Industrialization: Next-14
• Latin America: relied on foreign capital, foreign technology foreign markets
• Asian Countries:
– Malaysia, Thailand and Indonesia, (relied on foreign capital, foreign technology
and foreign markets). Similar in city-states of Hong Kong and Singapore.
– South Korea and Taiwan (relied on foreign markets but mobilized domestic
resources and developed domestic technological capabilities instead of relying
on foreign capital or foreign technology)
– China and India (relied mostly on domestic markets, domestic resources and
domestic technologies in the earlier stages of industrialization but later they
joined the quest for external markets with foreign technology & foreign capital.
• Brazil, Turkey and Egypt (a blend of domestic & foreign in markets, capital,
technology, which evolved over time, in their industrialization
• Development Models: strong reliance on markets & openness
(Argentina, Chile, Mexico, South Africa, Malaysia, Thailand & Indonesia),
state support with moderated openness (Brazil, Egypt and Turkey),
strategic intervention & calibrated openness (South Korea, & Taiwan),
state intervention and controlled openness (China & India).
• Common among these countries despite their apparent diversity: initial
conditions, enabling institutions, supportive governments (Nayyar 2013)
Global Trends: Pre-Pandemic
• Global growth remains low with slow recovery in post-
crisis period
– Stagnant global trade,
– Subdued investment, and
– Heightened policy uncertainty
– Growth in emerging market & developing economies (EMDEs)
• Global trade growth slowed further since global crisis.
– Soft imports from major economies depress trade flows,
– compounded by structural factors and
– Increased protectionism.
– Commodity prices fluctuations
• Policy uncertainty in the United States and Europe:
weigh on global trade and capital flows.
– Weak investment and productivity growth
– financial market disruptions, and weakening potential growth
World Economic Outlook-IMF (2019)
12
 19:18

Growth of the World Economy

World GDP during last Half Century (pace & regional distribution)

• Slow Growth & Recovery:

– Slow growth & recovery after global crisis:
– growth of Trade < GDP
– declining commodity prices
– turbulent financial markets; - volatile exchange rates
• Changes in Key Growth Motors:
– Growth of Productivity (structural dynamics)
– Working population (labour force dynamics)
• Growth Performance of Regions/Nations
– US: consumer & business confidence, New Tax Policy (Corporate
tax reduction, Destination tax),
– Europe (new hopes): decline in debt, cheap asset prices
– China (new challenges): huge debt
– India (bright spot): jobless growth

13 14

The World Economy: Transformation in the World Economy

Slow Growth & Recovery
• Confluence of factors affecting major economies:
China, US Japan
• Trade tension, new protectionism & financial
market sentiments worsened
• Euro area economy lost momentum: consumer and
business confidence weakened
• Moderate growth: Conditions improved in 2019:
accommodative monetary policy by US, optimistic
markets about US–China trade deal
• Many developing countries are growing faster:
independent & out of colonial rule
• Millions people are lifted out of absolute poverty
(income poverty fallen 52% to 10% during 1981-2015)
• Sustained growth of EMEs: (larger share in world GDP)
• Growing population: Urban Areas, Middle Class (50%).
• Impressive growth of Asia: rise of China, India
• Africa, LA & Middle East: Over-dependent on commodity
trade cycles.
• Development driven by rapid economic growth,
has been most uneven
• Inequality within & between: growth, income, aspirations

15 16

Evolution of World Economy: Performamce of Different Regions in World

Demographic Transition - Industrial Revolution - Rise of Income

17 18

Transformation in the World Economy
• Structural changes: production, consumption, exchanges
– share of developing countries in world industrial production is
higher than their share in world output
– industrialized countries are no longer the manufacturing-hub of
the world
– changing shares of country-groups in world income - EMEs
• Inclusiveness: for sustain rapid growth and transform into
development improves the wellbeing – environment
– significance of developing countries in the world economy
– uneven process of development & unequal outcomes across
continents
– lessons emerge from development experience of countries - initial
conditions, enabling institutions and supportive governments
– potential for, and the possibilities of, development futures in
countries that are latecomers
• Alternative paths to development: one-size-does-not-fit-all
19
Economic Transformation in Asia
Cross-Country Changes during Last Half Century
21
Growth of GDP & GDP per capita (%) : Major Regions
23
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The World Economy: Trends by 2050
• Demographic change: 7.3 to 10.7 billion, aging population,
shrinking workforce, jobs for youth (fall in workforce except Africa)
• Pace of urbanization: big addition from China, India, Nigeria
• International Trade: intertwined world (changes in national policy
and global trading system)
• Globalization of finance: volatile financial markets, more
integrated with reforms of global monetary, financial & taxation systems
• Rise of middle class: (>80% by 2050) potential for market &
inclusive dev., 84% (all from SE Asia)
• Competition for Natural Resources: to meet changing
demand and lifestyle of the mass by 2050
• Climate Changes: most economic damage to poor (Asia, Africa)
• Comp Tech Dev: R&D, Rise of EMEs, new global landscape shift
• Emergence of non-state actors: Challenges within
20
Structural Changes in the World Economy
• Profound changes the world economy:
– associated with structural transformations around 1980s,
– Impact on the process & outcomes on growth & dev.
• Key Factors for Changes:
– momentum of globalization, rapid internationalization of finance,
global financial crisis,
– technological revolution – ICT, growth of services, capital flows
– collapse of communism, return of entrepreneurial capitalism,
– Growth of global trade, investment, production
– Shift in production, investment, Mnf., exports, economic power
– growing economic significance of developing countries driven by
rapid economic growth, value added - transforming lives of many
• Challenges:
– unequal economic growth & outcomes across & between countries
– process of catch up by the latecomers or laggards
– Growing new protectionism & de-globalization
22
Structural Changes & Eco Diversities: Next-14
• Differences in economic size: small (Malaysia, Taiwan and Chile),
medium(South Korea, Thailand, Turkey, Egypt, South Africa, Argentina and
Mexico), large (China, India, Indonesia and Brazil).
• Different resource endowment settings: resource-rich & land-abundant
(Argentina, Brazil, Chile, Mexico, South Africa and Indonesia), resource-poor &
land scarce (China, India, South Korea, Taiwan, Thailand and Egypt), resource-
rich & land-scarce (Malaysia).
• Different growth drivers: primary commodities or natural resources as basis
for Mnf. (Argentina, Brazil, Chile, South Africa & Indonesia), cheap labour (China,
India, Malaysia, South Korea, Taiwan, Thailand, Turkey, Egypt and, to some
extent, even Mexico).
• Different market & resource focus: external markets & external resources
critical in industrialization (Argentina, Chile, Mexico, Indonesia, Malaysia, Thailand
and Turkey), domestic markets & domestic resources (Brazil, China & India),
external markets & domestic resources (S Korea, Taiwan).
• Different transitions reflected in patterns of structural change: labour
shift from Agrl. to Mnf., from low to high productivity employment (South Korea &
Taiwan, followed by Malaysia & China), others failed (India)
24
 19:18

Structural Changes & Models of Industrialization: Next-14 Asia in the World Economy
• Latin America: relied on foreign capital, foreign technology foreign markets
• Asian Countries:
– Malaysia, Thailand and Indonesia, (relied on foreign capital, foreign technology
and foreign markets). Similar in city-states of Hong Kong and Singapore.
– South Korea and Taiwan (relied on foreign markets but mobilized domestic
resources and developed domestic technological capabilities instead of relying
on foreign capital or foreign technology)
– China and India (relied mostly on domestic markets, domestic resources and
domestic technologies in the earlier stages of industrialization but later they
joined the quest for external markets with foreign technology & foreign capital.
• Brazil, Turkey and Egypt (a blend of domestic & foreign in markets, capital,
technology, which evolved over time, in their industrialization
• Development Models: strong reliance on markets & openness
(Argentina, Chile, Mexico, South Africa, Malaysia, Thailand & Indonesia),
state support with moderated openness (Brazil, Egypt and Turkey),
strategic intervention & calibrated openness (South Korea, & Taiwan),
state intervention and controlled openness (China & India).
• Common among these countries despite their apparent diversity: initial
conditions, enabling institutions, supportive governments (Nayyar 2013)

25 26

Asia in the World Economy: Growth of World GDP & GDP Per capita (%) by Regions
• Asia in Historical Perspective: last two Century
– Asia accounted for 2/3rd of world population & 3/5th of world income
before colonial era in the early 19th century.
– Worse colonial era: Sharp decline world income & population during
the colonial era: associated with deindustrialization,
– Fall of Asia attributable to its integration with the world economy,
through trade and investment, driven by imperialism.
– Asia became the poorest continent in the world, worse demographic
and social indicators, underdevelopment.
– Bad initial conditions, when Asian countries became independent were
the starting point Asia’s journey to development.
• Asia’s Growth Experience & Transition:
– Decline shares in world income and population
– Disparities in growth rates
– Divergence in per capita incomes
• Integration with the world economy
• Shaping and reshaping of initial conditions

27 28

Rise of Asia in the World Economy (1968-2016)

• The transformation of Asia: Growth of GDP & GDP per capita in the World & Asia by Regions
• Notable demographic transition (population doubled), social
progress (education, health), economic dev (growth, investment, trade
openness, Mnf. value added), during last 50 years (1970–2016),
• Asia’s share of world GDP: rose from <1/10th to 3/10th (Asia’s
population share was 27 % points higher than its income share

• Convergence of Asia’s income per capita towards world average.

• Higher growth in GDP & GDP per capita in Asia than elsewhere.
This catch-up in aggregate output & average income levels was uneven in Asia
• Share in world industrial production: jumped from 4% to 40% - a sharp
contrast with the decline share during the colonial era.
• Political independence: restored economic autonomy and national
development objectives pursued
• Unequal economic & social development among Asian countries:
East Asia was the leader, South Asia was the laggard, Southeast Asia in the
middle, progress in West Asia did not match its high income levels.

29 30
 19:18

Share in Manufacturing Export in the World & Asia by

Manufacturing Value-added in the World & Asia by Regions
Regions

31 32

Merchandise Trade in the World & Asia by Regions Economic Transformation in Asia
• Economic Progress: (output growth, income levels, structural
change, investment rates, infrastructure, and urbanization)
• Structural changes: share of primary sector in GDP fell from 27 to
8 % (sharp decline in all regions except W Asia)
• Share of Mnf. value added in GDP > doubled: faster in East
Asia, moderate in SE Asia, marginal in South Asia, falling in West Asia
• Increased in Degree of openness: ratio of merchandise trade to
GDP (43 to 70%) more in East Asia & SE Asia than South Asia.
• Rise in Investment & Gross capital formation: as % of GDP
(1/5th to 2/5th), broadly similar except East Asia and West Asia
• Infrastructure dev.: road density (4 times) electricity consumption
per capita (5 times)
• Urbanization: Urban to rural population ratio 1/5th to 1/2nd
• Demographic transition: (sharp drop in birth rates & fertility rates)
• Social progress: (rise in level of education, literacy rates, improved
health, life expectancy, fall in infant mortality rates)

33 34

Uneven Socio-Economic Dev in Asia by Regions Macroeconomics & Growth Experience of Asia
(Asia-14: major 14 Asian countries)
• Economic growth over fifty years in the Asian-14 has been stunning.
• Investment and savings, which rose rapidly, were the main drivers of growth.
• Education was also a sustained driver of growth on the supply-side.
• From the demand-side, growth was primarily private-consumption-
expenditure led and investment led.
• The interaction between the supply-side and the demand-side suggests a
virtuous circle of cumulative causation, where rapid investment growth
coincided with rapid export growth, leading to rapid GDP growth.
• Macroeconomic management & growth experience in Asia: policy
instruments for high economic growth, employment creation flexibility to
finance government deficits, raise sustainable levels of government
borrowing, making inflation rates politically more acceptable, which would
not have been possible if economic growth was slow.

35 36
 19:18

Growth in GDP & Employment by Sectors The World Economy: changing landscape
(Annual growth in %, 1991- 2016)

• Core: high wages, advance technology, diversified

production mix
• Periphery: low wages, rudimentary technology,
simple production mix
• Semi-Periphery: mix of the both: exploitation of
peripheral countries by core countries – resource
exporting countries – Saudi Arabia, S Africa, NIEs
• Great Divergence: Industrial Revolution reduced income
inequalities within societies, it has increased them between
societies,

• Rise of Asia & other Emerging Economies

• Changing Global Trade:

37 38

India’s Growth & Development Experiences:

India’s Economic Growth & Dev. India has experienced augmented Growth Trajectory
Experiences but its Growth Transition has been Clumsy and
Unconventional …
Growth Phases • India’s Diverse Growth Experiences: Pre-
independence, Post independence & Reform period
Structural Changes
• India’s Development Planning & Strategy:
Major Policy Shifts Conflicting Objectives – Growth v/s Equity, Sectoral v/s Regional
focus, State v/s Market
Economic Transformation
Development Paradox • Major Policy Shifts: Outward orientation, pro-business
and pro-market policy
• Challenges & Opportunities: economic & business
environment

39 40

India’s Structural Changes & Eco Transformation

India’s Emergence in the World Economy
• Post-Independence Period: colonial exploitation - • India’s growing importance: last few decades & based on
India embarked on autarkic path of development – IS & its knowledge resources (young & educated workforce, technological
‘self-reliance’ capability, knowledge of English)

• Regulation & Rigidity: activities & markets: products
& factors:
• Emergence of East Asia: India remains the most
inward-looking country – closed for trade & investment –
paid price for forgone trade, investment, tech, productivity
• Deregulation: policy shift - pro-business & pro-market
policies
• Reforms & Liberalization: India’s engagement with
world – evolution & extent
• India yet to make successful transition towards a
fully knowledge-driven economy: (Constraints in using
knowledge to enhance growth and development)
• Tragic neglect of low-end labour intensive Mnf.:
weak inter-sectoral linkages
• Expansion of high-end knowledge intensive
sectors: how high is India’s high end sectors?
• India’s economic emergence not sustainable:
China, Brazil & other are catching up fast

41 42
 19:18

Indian Economy under British Rule
(Pre-Independence Period: till 1947)
• Indian economy under Colonial Rule: Low level of
economic activity, low productivity, suppressed markets.
Impacts of British Rule on Indian Economy
• Political & Economic System: interests were
rooted in foreign soil
- Rule of East India Company (1757 to 1858)
- Rule of British Government in India (1858 to 1947)

• Unfavorable Economic & Political Factors:
underdevelopment and stagnation of Indian economy
• Colonial Policy: to protect and promote the interests of
ruling country than development of Indian economy
• Hostile Policy of Colonial Rule: unemployment, human
suffering, famines, supply side constraints
• Economic Exploitation: input, output, markets,
• Agriculture: Commercialization of Indian Agriculture & New
Land System: Rural and Agriculture Stagnation & Distress

• Vested Interest of Colonial Rule: Transforming India into
supplier of raw materials and market for consumer and other
finished industrial products from Britain.
• Industry: Decline of Indian Handicrafts and Progressive
Ruralization of Indian Economy, De-industrialization
• Trade: Competition with Machine-Made Goods: opening of
Suez Canal in 1869 reduced transport costs
• Poverty & Poor Human Development:

43 44

India’s Growth Phases & Experiences

Growth rate of Real Income (%) Years Period Growth (%)
1820-1947 Colonial period <1
Period National Income Population Per Capita Income
1951-1965 Initial Plan period 4.1
1860-1985 1.76 0.53 1.23 1965-1970 Crisis Period(internal shocks) 3.0
1885-1900 1.01 .55 0.46 1970-1980 Crisis Period (External shocks) 2.9
1980-1990 Transition period 5.6
1900-1914 1.45 .45 1.00
1991-2003 Reform Period 5.5
1914-1947 1.14 1.08 0.06 1997-2002 IX Five Year Plan 7.8
2002-2007 X Five Year Plan 9.0
2007-2012 XI Five Year Plan 8.2
Source: Mukherjee (1965) 2014-2019 New Plan 5.2

45 46

India’s Growth & Dev Performance:

The Paradox
India’s Growth Experiences
• High growth within diverse domestic & global
• Human Development Index (HDI): 136/187 environment: emerging giant…bright spot..
• Gender Development Index (GDI):113/135 • Disproportionately higher growth: multiple economic
• Global Gender Index (GGI): 114/136 issues – job, poverty capacity to consume
• Global Hunger Index (GHI): 67/81 • Growth & Structural Transformation Mismatch:
• Social Progress Index: 102/132 clumsy & unconventional

• Millennium Development Goals (MDGs):
• Sustainable Development Goals (SDGs):
– India’s lower position & performance in overall
development shows - it fails to transform high growth
into better social sector or human development
• Key Growth Motor: Export-oriented services led growth
no more smoother – rise in capital intensive Mnf.
• Jobless growth: slow pace of poverty reduction & rising
inequality,
• Missing of inclusive growth: poor & low progress in
human development

47 48
 19:18

Growth Experience during Reform Period

“Hindu Growth” to Volatile Growth India’s Long Run Growth Acceleration:
Agrl, Industry & Services Sectors(1971-2017)
• “Hindu” rate of growth: disappointing but not disastrous
• Shackled by the socialist policies: state control and regulation
• India Transformed: low growth to high growth economy but fails to
sustain it
• Policy shift in favor of private business since 1980s:
pro-business (raising pvt. profitability) pro-market (market driven)
• Strong political & economic institutions: Stimulant for
economic growth even under price and other market distortions
• Growth Transition: grounded in an impressive increase in
productivity
• Rising variability in growth rates:

49 50

India Transformed? India’s Long Run Growth Acceleration:

(how & how much)
Growth of GDP & Per capita Income (1971-2017)
• Economic Transformation: from a poverty-ridden slow
growing closed economy to fast-growing open dynamic one
• Policy Transformation: break from the direction since 1950 –
market oriented big-bang reforms (US, UK – 1980s)
• Size of the economy: about five times of 1991 (China has
grown 10 times during same period)
• Much focus on growth: status of high growth economy
• India’s Engagement with the World: different with new
direction and more consistent with globalizing world - (Collapsed of
USSR, new foreign policy, acquisition of nuclear capability in 1990s,
approach to defence and security)
• The Paradox remains: India still a low-middle income
emerging developing economy with millions of poor
• The Debate: Anything say about India – the opposite is also true

51 52

India’s Growth Experiences Structural Transformation &

• High growth within diverse domestic & global
environment: emerging giant…bright spot..
• Disproportionately higher growth: multiple economic
issues – job, poverty capacity to consume
• Growth & Structural Transformation Mismatch:
clumsy & unconventional
• Key Growth Motor: Export-oriented services led growth
no more smoother – rise in capital intensive Mnf.
• Jobless growth: slow pace of poverty reduction & rising
inequality,
• Missing of inclusive growth: poor & low progress in
human development
Sectoral Growth in India
• Fast Growing Export Oriented Services Sector
• Poor Performance of Manufacturing
• Low and Stagnant Agriculture
• Structural Transformation: shift out of agriculture,
booming service sector, low/stagnant manufacturing sector
• Key Sectoral Reforms: Telecommunications Electricity, power
big time reforms
• Trade Liberalization: Tariff reduction - 350% in 1991 to
<10% now on industrial goods (9% in China)
• Foreign Investment (FDI): liberalized & dramatically
across regions and sectors

53 54
 19:18

Structural Transformation of India’s Economy: Key Drivers of Growth:
Sectoral Shares in GDP(%):
• India (Market-led)
• Domestic markets
(insulated to global downturns)
• Services Sector
(skipped industrial dev.)
• Consumption
(consumption - 64% of GDP)
• High-tech Capital
intensive industry
• Strong Institutions
• Less Inequality (Gini
Index in India- 33%)
India v/s Asia
• Asia (State-induced)
• Exports markets (more
volatile to global downturns)
• Manufacturing (capitalize
on industrial dev.)
• Investment (consumption as
% of GDP China-42%, EU-58%)
• Low-tech labour
intensive industry
• Strong Governance
• High Inequality (Gini Index -
China 45% Brazil 54%)

55 56

India’s Growth Transition: Major Policy Changes & Growth Phases,

Linking Growth to Policies
• Low growth during pre-independence period (0.9%)
– Colonial Rule/Policy Regime (exploitation, suppression of market
and value addition, deindustrialization,)
• Low & stagnant Growth(3%)1950-80: Initial Plan Period
– Nehruvian model (planning driven, PSU dominated, controlled
policy)
• Upward Growth Path (5%)1980-90: Initial Reform Period
- Policy of Deregulation
• High Growth Period (7-8%) 2000s: Reform Periods
- Pro-business and Pro-market Policy: -
• Missing of Inclusive growth: failure of Take-off stage, Trickle
down economics (Sen), Pull up strategy (Bhagwati)
• Phase-I(1950-65): moderate growth (4%) Large Public sector,
trade protections, incentive to domestic industry, poor performance of
agriculture, lack of innovations & capital investment
• Phase-II(1965-1975): low growth (3%) Restricted industrial and
trade policy regime, intensification of state interventions, agricultural
reforms, internal and external shocks
• Phase-III(1975-1990): low but rising growth (3-5%) Departure
from past policy - import substitution to trade promotion, Public spending,
decontrol policy
• Phase-IV(1990-00):Structural & Institutional changes for
competition & private investment, major policy shifts – SAP, Inward
Orientation: EP (efficiency), IS (effective protection)
• Post-Reform (2001-13): High Growth, High Inflation, Rising
foreign exchange reserve, Regional inequality, Laggard agriculture,
Inadequate infrastructure, Slow poverty reduction, Poor human
development

57 58

India’s Growth Experiences India’s Major Growth Challenges

• High growth within diverse domestic & global
environment: emerging giant…bright spot..
• Disproportionately higher growth: multiple economic
issues – job, poverty capacity to consume
• Growth & Structural Transformation Mismatch:
clumsy & unconventional
• Key Growth Motor: Export-oriented services led growth
no more smoother – rise in capital intensive Mnf.
• Jobless growth: slow pace of poverty reduction & rising
inequality,
• Missing of inclusive growth: poor & low progress in
human development
• Grown so slow for so long: growth & structural changes
• Poor performance of Agri: leapfrog to services
• Missing of expanding Mnf.: India lost out to other
economies (China) in the low-end segment of mass Mnf.
• Growth of services sector: Lower end activities in high-
end sectors (customized IT & ITES, generic medicines) few opportunity
• Global Competitiveness: lack of innovativeness, tech.
advancement, skill intensive, R & D
• Pace & sequence of reforms: sectoral & regional
trends
• Inclusive of growth & development: may not a
sustainable in a democracy like India

59 60