On the Sustainability of India’s Non-Inclusive High Growth
Abstract: This paper examines the sustainability of the unprecedentedly high aggregate GDP growth witnessed in India from 2003-04 till the eruption of the global crisis. It argues that the post-liberalization highly non-inclusive and corporate-sector led growth trajectory in India suffers from a fundamental contradiction which renders it inherently unstable. This contradiction is between increasing dependence of growth on investment demand and the absence of a commensurate expansion of either output or employment in organized manufacturing, the main sector where rapid growth of capital formation tends to be relatively concentrated. This had already generated a collapse of investment and a manufacturing centered growth slowdown in the second half of the 1990s. The paper shows that high growth in India after 2003-04 did not eliminate this contradiction. Instead, the transmission effects generated by an exceptionally expansionary phase of the global economy enabled a sharp revival of investment which generated this growth, but in the process the contradiction started surfacing again. With the global crisis this phase came to an end, and in the post-crisis situation revival of that growth trajectory appears unlikely. In such circumstances even modest gains on the development front from via the positive effects of high growth on public revenues cannot be guaranteed.
|Date of creation:||Dec 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mazumdar, Surajit, 2008. "Investment and growth in India under liberalization: Asymmetries and Instabilities," MPRA Paper 19629, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:28163. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.