Thursday, March 29, 2012

India's new growth paradigm

That's the title of my latest ET column. I sum up my thesis as follows:
This may sound wildly optimistic but it is possible that India is moving towards a new growth paradigm. The fiscal deficit will remain at a higher level on the average than in 2004-08. Inflation will be above the comfort zone of 4-5%. We will not have a global boom along the lines we saw earlier. And yet, growth of the order of 8-9% will be achievable thanks to a high investment rate.

4 comments:

chandramouli said...

Perfectly correct. I agree with you.

sujatha said...

Very succinctly put. A novice in this subject, for the first time I have understood something ! however inflation still bothers me.

chandramouli said...

After further thinking on your thesis, I agree with the same. However, as a report states top 100 individuals in India control 25% of our GDP. The savings and investment comes from this group plus the middle class. With the growth rate of 8/9% the benefits of growth will continue to accrue to this class and the inequality that is at deplorable levels will continue to widen, if at all there is any scope for further widening as the lower levels are pathetically low and higher levels are phenominally high. The growth rate is therefore meaningless. This is the point that Ms. Indira Gandhi made out at a conference in Mumbai, to justify the taxation rate of 97%!!!!! Her policy was also extreme thwartling the growth. But something ought to be done to distribute this growth to the poor echelons on our society, who are deplorably poor.

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