Economic Slowdown in India: An Introductory Analysis PDF
Preview Economic Slowdown in India: An Introductory Analysis
Economic Slowdown in India The devastating effect of Covid-19 on the Indian economy is by now well-known. The growth rate of the economy slumped to a negative figure in the year 2020–21. What is less talked about, however, is the fact that growth slowdown in India had started several years before the pandemic struck. The two questions that naturally arise are “what explains the long economic slowdown?” and “what can be done about it?” This book is an in-depth analysis of the economic slowdown in India in recent years and the reasons behind the persistent slowdown in the growth rate of the Indian economy in the 2010s, especially in the latter half of the decade. While discussing both macro- and microeconomic policies, the volume examines how the perspective on economic policy has evolved over time in consonance with experience by investigating major instances of such slowdowns in the past. Three global slowdowns (namely the Great Depression of 1929, the stagflation induced by the oil crisis of the 1970s and the Global Financial Crisis of 2007) and the industrial deceleration in India in the late 1960s and early 1970s are discussed. The author also probes into the problems of inequality, poverty, inflation in the Indian economy pre- and post-pandemic and policies targeted towards development, manufacturing and distribution of vaccines. The book further discusses possible economic impacts of the Ukraine War and the long-term problem of global warming. Concise and thoroughly researched, this book will be of interest to beginners, scholars, research students and teachers interested in economics, policy-making and development studies. Asis Kumar Banerjee, Ph.D. (Johns Hopkins), is a former vice-chancellor and a former professor of economics, University of Calcutta. He has held visiting positions at Presidency College, Calcutta; the Indian Statistical Institute, New Delhi; and the University of California, Riverside, California. His research interests include development economics, welfare economics, game theory and the measurement of inequality and poverty. His previous publications include the book Measuring Development: An Inequality Dominance Approach (2020). Economic Slowdown in India An Introductory Analysis Asis Kumar Banerjee First published 2023 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2023 Asis Kumar Banerjee The right of Asis Kumar Banerjee to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-032-39124-3 (hbk) ISBN: 978-1-032-39602-6 (pbk) ISBN: 978-1-003-35051-4 (ebk) DOI: 10.4324/9781003350514 Typeset in Sabon by Apex CoVantage, LLC To Archan Contents List of Tables viii List of Abbreviations x Preface xii 1 Introduction 1 2 Major economic slowdowns of the past and the evolution of economic policies 12 3 Recent trends in economic growth: India and the world 41 4 What caused the slowdown? 52 5 Arresting the slowdown: the policy issues 74 6 Economic policies and pandemics: the case of Covid-19 104 7 Where will the money come from? 132 8 Afterword: Headwinds and prognosis 161 Index 177 Tables 1.1 Annual real GDP growth rates (per cent) in South Asian countries, 2020–21 4 3.1 Annual real GDP growth rates, 2001–20: India and the world 42 3.2 Annual real GDP growth rates in Bangladesh, Pakistan and India, 2011–12 to 2020–21 47 4.1 Annual GDP growth rate (per cent) and GFCF as percentage of GDP in selected countries, 2019 53 4.2 Private, public and total GFCF as percentages of GDP and the rate of growth of GDP in India, 2011–12 to 2019–20 54 4.3 Income inequality in India: percentage shares of population groups in total income in 2001, 2012 and 2019 60 4.4 Wealth inequality in India: percentage shares of population groups in total household wealth in 2001, 2012, 2019 and 2021 61 4.5 Annual growth rates (per cent) of India’s exports of goods and services, 2001–02 to 2020–21 66 5.1 Monthly CPI inflation rates in India, April 2017 to May 2022 79 5.2 Annual CPI inflation rates in India, 2012–13 to 2021–22 80 5.3 Monthly headline and exclusion-based CPI inflation rates in India in some recent months (year-on-year, per cent) 88 5.4 Monthly CPI inflation rates (per cent) for selected groups vis-à-vis headline CPI inflation rates in India in the last four months of 2021 89 8.1 Annual GDP growth rate (per cent) forecasts by the World Bank: India, Bangladesh, Pakistan, the world economy and the AEs 163 8.2 Annual GDP growth rate (per cent) forecasts by the IMF: India, the low-income developing economies, the world economy and the AEs 164 8.3 Annual GDP growth rate (per cent) forecasts by the OECD: India, the world economy, the G20 and the OECD countries 164 Tables ix 8.4 Benefits of two countries for different combinations of their strategic choices regarding sharing the costs of reducing global warming: an example 171 8.5 Prisoner’s Dilemma: punishments of the two prisoners for different combinations of their strategic choices 173
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