From Stellar Growth to Underperformance

The economic trajectory of the Indian economy has altered several times. After decades of severe underperformance, the Indian economy gradually picked up momentum in the 1980s and 1990s, and turned in a stellar performance during the 2000s. This paper examines the rationale behind the ups and downs in India’s economic performance. It provides a succinct account of various phases of growth, delayed initiation of reforms, tardy and incomplete implementation, and vitally important economic strategies that should have been adopted by Indian policymakers but were ignored. In addition, India failed to address several serious structural issues, allowed them to fester indefinitely and paid a high price in terms of GDP growth. Paradoxically the economy benefited from the incomplete reforms and Indian growth had a stellar growth period in the 2000s, before slumping in 2011. Deterioration continued in 2012. The paper delves into the causes behind the deceleration, and analyses how macroeconomic attrition came about. It concludes with proposals of a revival strategy warranted by the current economic predicament.