Question

The Indian economy was growing rapidly; now growth has halted. Therefore, India needs to spend roughly $500 billion upgrading its infrastructure and education and health care facilities. Agriculture remains unproductive; and reforms, like strengthening the legal system, have been ignored.

Read India’s Manufacturing Hits Brick Wall as Economy Slows to learn more about the conditions that have impacted India’s economic environment.

Then, in your initial post to this discussion, address the following prompt based on the article and what you’ve learned in this module about global economic growth and development:

Explain which measures could lead to faster growth for India’s economy.

Make sure to address each the following items in your initial post:

• Determinants of growth
• Determinants of development
• How the determinants relate to new growth theory

Answer 1

We need to see a rise in demand or an increase in productive capacity. Investing in these activities develops the economy growth

Measures that lead to faster economic growth are :

• Expansation in fiscal policy – cutting taxes to increase disposable income and encourage spending. However, lower taxes will increase the budget deficit and will lead to higher borrowing. The expansionary fiscal policy is most appropriate in a recession when there is a fall in consumer spending.
• Expansionary in monetary policy (now usually set by independent Central Bank) – cutting interest rates can boost domestic demand.
• Stability. A key function of the government is to provide economic and political stability which enables the usual economic activity to take place. Uncertainty and political tension can discourage investment and economic growth
• Investment in infrastructure, e.g. new roads, railways lines and broadband internet – increases productive capacity and reduces congestion.
• Privatisation and deregulation – increase efficiency and productivity.
• The determinants of economic growth is GDP(gross domestic product)
• Aggregate demand and aggregate supply are also measured to know the growth