INDIAN ECONOMY AND POLICY

CIA 1

CASE : STUDY INDIA ECONOMIC GROWTH AND DEVELOPMENT

Submitted by: Manvith(20MBAR0541)

SPECIALISATION: MHR
STUDY INDIA ECONOMIC GROWTH AND DEVELOPMENT

The year 2020 saw unprecedented disruptions to lives and livelihood all across the world and India
was no exception. As the nation waded through the pandemic-induced challenges, industries had their
fair share of learnings along the way. India's GDP is expected to reach US$ 5 trillion by FY25 and
achieve upper-middle income status on the back of digitization, globalization, favourable
demographics, and reforms.

India is also focusing on renewable sources to generate energy. It is planning to achieve 40% of its
energy from non-fossil sources by 2030, which is currently 30%, and have plans to increase its
renewable energy capacity from to 175 gigawatts (GW) by 2022.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4
trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston
Consulting Group (BCG) report. It is estimated to surpass USA to become the second largest
economy in terms of purchasing power parity (PPP) by 2040.

The infrastructure sector has become the biggest focus area for the Government of India. India plans
to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the
country. The Government has suggested investment of Rs. 5,000,000 crore (US$ 750 billion) for
railways infrastructure from 2018-30.

India and Japan have joined hands for infrastructure development in India's Northeast states and are
also setting up an India-Japan Coordination Forum for Development of Northeast to undertake
strategic infrastructure projects for the region.

QUESTIONS :
1) Discuss the Indian economic growth indicators presented in the case?
GDP
The gross domestic product is the logical extension of measuring economic growth in
monetary expenditures. It represents the value of all goods and services produced over a
specific time period within a country’s borders.

Level of poverty
It is the headcount ratio, which simply measures the proportion of the population considered
to ear an income less than the standard required for basic needs.

Malnutrition level
It is the percentage of population with insufficient food level. Malnourished are less able to
work, contribute to economy, and provide care for their family.

Literacy rate
It is one of the key indicators of economy which leads to enhancement of country’s human
capital. It is defined by the percentage of the population of a given group that can read and
write.

Life expectancy rate

It is the key metric for assessing the health of the population. Life expectancy captures the
mortality along the entire life course. It tells us the average age of death in a population.
 Quality of nations infrastructure
It is the basic facilities which directly benefit the process of production and distribution in the
economy. Effective infrastructure supply supports economic growth, enhances quality of life
and it is important for national security.

Inflation
It aims to measure the overall impact of price changes for a diversified set of products and
services, and allows for a single value representation of the increase in the price level of
goods and services in an economy over a period of time.

2) In your opinion, “was Indian economy doing well pre pandemic”? why or why not?
The Indian economy was in one of its worst ever deceleration phases even before the Covid-
19 pandemic. GDP growth fell continuously for eight quarters (except for a .08 percentage
point blip between December 2018 and March 2019. It was 8.2% in March 2018 and had
fallen to just 3.1% in March 2020. March saw just a week of the lockdown (which would
eventually last 68 days, albeit with some relaxations).

Even before the full force of the pandemic hit India (which was really in April-June quarter in terms
of livelihoods; and July onwards in terms of lives with both cases and deaths rising), the slowdown
was already worse than the one the Indian economy went through in 2011-12.
Back then, quarterly GDP growth fell from 10.3% in March 2011 to 4.9% in June 2012. However, the
economy started recovering after 2011-12. Annual GDP growth fell from 8.5% in 2010-11 to 5.2% in
2011-12. This contraction was followed by a sharp recovery until 2016-17. This has not been the case
this time and GDP growth has been falling continuously since 2017-18.

3) What steps we would have taken to boost our economy before covid ?

The steps that were taken to boost our economy before COVIDE:
• CHEAPER CASH: A series of steps announced this year aim to encourage banks to
lend. Measures announced by the Reserve Bank of India since early February inject cash
equivalent to 3.2% of the country’s gross domestic output
• LOAN FREEZE: RBI Governor Shaktikanta Das has stopped the clock on loan
repayments amid an unprecedented three-week lockdown announced by Prime Minister
Narendra Modi
• REGULATORY DEFERRALS: Implementation of stricter regulations have been
delayed
Rules requiring banks to fund their activities through stable sources has been deferred to Oct.
1 from April 1
• MORE MONEY: The RBI has been injecting additional liquidity in the banking
system to keep down bond yields
• MORE DOLLARS: RBI pledged to inject dollars through dollar-rupee swaps
• Allows companies additional 45 days for declaring their quarterly and annual results;
extends the date for submission of corporate governance report by a month; company boards
exempted from provision of maximum time gap between two meetings (March 19)
• FREE FOOD AND FUEL: 800 million poor people will get 5 kilograms wheat or
rice and 1 kg pulses every month during April to June; 80 million families to get free cooking
gas
• CASH TRANSFERS: 200 million women with basic bank accounts will get 500
rupees a month until June; 30 million senior citizens, widows and disabled to get 1,000
rupees; 87 million farmers will be immediately paid 2,000 rupees under an existing program
• INSURANCE: 2.2 million health workers fighting COVID-19 will get an insurance
cover of 5 million rupees
• JOBS AND WAGES: For people earning less than 15,000 rupees a month,
government will pay 24% of their monthly wages that feed into pension and provident fund
accounts; Wages under job guarantee program increased to provide annual benefit of 2,000
rupees to a worker