The Indian Economy in the Second Decade of the 21st Century: Signs of a Crisis?

Despite apparently experiencing reasonably good GDP growth rates in that period, there are several indications that the growth process of the Indian economy entered into a phase of crisis in the second decade of the current century. Investment and trade stagnation and increasing dependence on consumption demand, coupled with poor industrial (including construction) and agricultural growth, mark out this decade and differentiate it sharply from the period of high growth that preceded the global crisis of 2008. Arguing that Indian growth has been primarily based on cheap labour throughout the liberalization period, this paper argues that the distributional imbalances implied in such a growth trajectory facilitated the earlier boom even as they made it unsustainable. The current crisis, however, is more than a cyclical downturn and may in fact reflect the limits of growth through cheap labour.