Indian Economy - A Study

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INDIAN ECONOMY NOW AND THEN…….

Crisil’s outlook for GDP growth during 2003-04 is 7.1%; sectorally this decomposes into 7.3% for agriculture, 6.3% for industry and 7.5% for services. Clearly, the high growth rate this year is driven by the large positive swings in agriculture because of the very good monsoon. The high growth this year is driven by the large positive swing in agriculture because of the very good monsoon. The important development this year is that industry will have its successive year of 6% plus growth, something it hasn’t experienced since mid 1990s . This is the consequence of the combined impact of lower interest rates and a pick –up in government capital expenditure, primarily by way of roads. The impact of both these factors is likely to persist for some time to come, so we are quite positive about sustainability of industrial performance. If it continues at this level, new investments in a variety of sectors will provide further boosts. Services have shown themselves to be immuned from cycles in both agriculture and industry. As a consequence of both increasing direct domestic demand and increasing degree of “tradability”, which is contributing to rapid export growth in some sectors..

THE MUCH NEEDED FISCAL REFORMS….

The two most important constraints to accelerating growth in India are inadequate infrastructure (power and transport) and rigidity in labour markets. We have some progress through the highway development program in the passage of electricity act. Assuming the remaining wrinkles are ironed out, these reforms will begin to have an impact over the coming years.

INDIAN ECONOMY BECOMING 3RD LARGEST BY 2050….

The most important link between the present and the future is the issue of employment. The Goldman Sachs report emphasizes the importance of our working age population as a critical resource in our growth pattern over the coming decades. But this only reflects our potential. This potential will not be realized until they are productively employed. The GS analysis in conclusion are based on the explicit assumption tat the vast majority of our working age population will be so employed if we fail to put this process in motion immediately the GS projection will remain an unachievable target .