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

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Growth with Imbalances

After a sputter in 2008-09, growth in the Indian economy has revived, but what of the many imbalances?

The Indian economy has returned to a path of high growth. The Central Statistical Organisation (CSO) has placed its revised estimates of GDP growth for 2009-10 at 7.4%, up from the advance estimates of 7.2%. Growth in the 4th quarter of the year has been placed at 8.6% compared with 5.8% growth in the corresponding quarter of 2008-09. Buoyed by these numbers, everyone in government from the prime minister downwards is placing GDP growth at 8.5% in 2010-11 and 9.0% in 2011-12, the terminal year of the Eleventh Five-Year Plan. In fact, Prime Minister Manmohan Singh has hoped for a 10% growth in the medium term, so as to reduce poverty and unemployment.

The statistical artefacts suggest that the high growth phase began in 2003-04 the National Democratic Alliance (NDA) government’s last year in office, during which that government suffered from the “India Shining” syndrome. After that, for five years up to 2007-08, real GDP growth averaged 8.9% per annum. There was a temporary halt to this high growth phase in 2008-09 (6.7%) and to an extent in 2009-10 (7.4%) as a consequence of the global financial and economic crisis and the strong monetary measures taken to fight domestic inflation.

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