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Economic growth refers to an increase in the amount of goods and services produced per head of the population over a period of time. Economic development is the process by which a nation improves the economic, political and social well-being of its people. Together, economic growth and development is a country’s ticket to expansion and GDP growth.
nominal GDP of 2,250.987 billion dollars, an increase from the rank of 8th in 2013. By 2020 it is estimated that India’s ranking will escalate to being the 5th largest economy in the world. By GDP Purchasing Power Parity (PPP) India is ranked 3rd and is amongst the top 20 global traders according to the World Trade Organisation (WTO). India has become a global economic power and it is regarded as one of the economic and political drivers of the international economy particularly in trade and global governance. However, with the absence of a well-functioning legal and regulatory system, corruption remains a serious obstruction. Despite India’s rapid success in world trade and the country’s growth, the Indian government has failed in reforms of land possession and goods and services taxes.
India’s history as a socialist-inspired independent country was influenced by its colonial experience. Before the economic liberalisation of India in 1991, India’s government attempted to close off its economy to the outside world. This was managed by making it impossible to convert Indian rupees (currency of India) into other currencies, high tariffs and import licensing which resulted in the prevention of foreign goods reaching the market. India also implemented policies in which firms required licences to invest and develop their industries making it difficult for the economy to grow to its potential and rather have it deadlocked with a certain amount of firms being allowed to operate and no outside exposure from other countries. The Indian government believed that India’s economy will grow and develop by only relying on internal markets and no international trade. However, this proved wrong as globalisation and global trade play a significant part in a country’s economic growth and development allowing it to expand and reaching full potential with the help of other countries.
There has been a large development of the Indian government since before the economic liberalisation of India in 1991 which was initiated by the fall of the Soviet Union, one of India’s largest trading partners and by the Gulf war which led to a rapid increase in oil prices and India found itself in crisis and large debts. This directed India into receiving a large loan of $1.8 billion from the International Monetary Fund (IMF) whom in return demanded for India to deregulate policies. The Economic liberalisation in India had the goal of making the economy more market-orientated and expanding the role of private and foreign investment, steering India into the right direction of reduced tariffs and interest rates, ending public monopolies, deregulation of markets and allowing larger foreign direct investments in many sectors.
Economic growth of a country is a situation in which there is a continuous increase in a country’s production capacity and is measured by real GDP. The Indian government has been highly focused on increasing employment opportunities by reaching its highest number of employed persons in 2016. With India’s growing rate of 7%, there are still not enough jobs and economists say the reason for this is due to more work being done with fewer employees. According to the India Exclusion Report 2013-2014, only 27 million jobs were added from the period of 2004-2010 which was supposedly the high growth period and should have generated a larger number of jobs. India’s 2016 Budget stated specific requirements to expand productive employment by giving a push to certain sectors of the rural economy and infrastructure that would create jobs. Another reason to why employment in India is not as fast growing as required is because of the increase in outsourcing. For example, India has a large manufacturing sector however many commodities are being outsourced as it is more efficient and fast for India.
India’s growth of the current approximately 7% is far below market expectation and it is sought to be double digits. The prime minister, Narendra Modi, expects more job creation with a growth in double digits. Mr Modi expects to get the country’s growth moving by implementing reforms and boosting government spending to balance a lack of private sector investment. The International Monetary Fund (IMF) is remaining optimistic and is forecasting India’s economy to grow a further 0.6 % in 2017. This is supported by the government’s decision to rebound agriculture, reformation of civil service, increasing positive contributions from exports and a recovery of private investment.
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