Topic:Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Economists and experts argue that India is now in classic Stagflation Territory. Analyse. What are the structural policies needed to curb the economic slowdown facing India?
Why this question:
The slowdown is three years in the making and it is now irrefutable that India is in a growth recession.
Key demand of the question:
One has to find the reasons for the economic slowdown facing India and provide the structural measures needed to overcome the same.
Analyze – When asked to analyse, you have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.
Structure of the answer:
Define what is stagflation.
Stagflation, as defined by Princeton economist Alan S. Blinder, is “the simultaneous occurrence of economic stagnation and comparatively high rates of inflation”.
Discuss the reasons for the economic slowdown.
Provide data to substantiate your views.
According to the National Statistical Office (NSO), the Consumer Food Price Index increased from 5.11% in September 2019 to 7.89% in October 2019. The retail price inflation rate reached an annual high at 4.62%. The government itself has admitted that growth has slowed. The recent NSO estimates of gross domestic product (GDP) for the second quarter of 2019-20 reported a further reduction in the growth rate of GDP to 4.5%, the lowest since 2012-13.
Provide the various structural measures needed to overcome
like Higher liquidity and disposable income, and increased employment; reduction and reform of direct individual and corporate taxes, and indirect taxes. Labour laws also need to be amended to generate employment.
Conclude with a way forward.