ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Macroeconomic Policy and Economic Growth in the 1990s

The 1990s did not witness a significant step up in the rate of growth of the economy. This failure to show acceleration, especially in industry, is often treated as a failure of reforms to sufficiently energise the Indian economy. However, this does not warrant the conclusion that the reforms failed. There may have been less than imaginative macroeconomic policy support to growth. In particular, there was declining budgetary support to capital formation, especially in agriculture, and the bizarre case of a missing monetary policy. The growth experience of the 1990s shows that macroeconomic policy is indispensable even in peace-time so to speak, and not just during a crisis. Poor macro management might leave untravelled even the most sophisticated road maps for structural change usually termed 'economic reforms'.

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