Can India Sustain Its Present Economic Growth Rate
Can India sustain its present economic growth rate?
India is an emerging economy that is witnessing unprecedented levels of economic expansion. It is widely expected that India may overtake China as the world’s fastest growing major economy by 2015. However it is not easy to sustain high levels of economic growth rates. There were a number of countries that experienced a high economic growth rate but were unable to sustain it for a long period of time. In order to determine whether India can sustain its economic growth rate we need to study the various factors that create an impact on India’s economy.
There are several factors that have positive impact on India’s economic growth rate. The first is India’s demography. India is experiencing a surge in its working-age population. The second factor is the economic reforms of early 1990’s in India. These economic reforms have unleashed an explosion of pent-up commercial energy and have led to the creation of a dynamic private sector in India. The third factor is that India has a large domestic demand due to which it is relatively less prone to ups and downs of the international trade.
India’s demographic profile indicates that one hundred million people are likely to join the workforce by 2020, which will also lead to a decrease in dependency ratio. World Trade Organization [WTO] (2010) predicts that India will account for a quarter of the increase in world’s labor force over the next 20 years (India, 2010). This increase in population can lead to higher savings and better productivity, which in turn will create an even more vibrant consumer culture and boost investment of all kinds. It is important to note that the demographic dividend was the driving force of the Middle Kingdom’s turbocharged economic growth (Sharma, 2010).
Furthermore, Indian government introduced economic reforms in early 1990s. Tariffs were cut down drastically. Government lessened its control over private businesses. Private firms were
India is an emerging economy that is witnessing unprecedented levels of economic expansion. It is widely expected that India may overtake China as the world’s fastest growing major economy by 2015. However it is not easy to sustain high levels of economic growth rates. There were a number of countries that experienced a high economic growth rate but were unable to sustain it for a long period of time. In order to determine whether India can sustain its economic growth rate we need to study the various factors that create an impact on India’s economy.
There are several factors that have positive impact on India’s economic growth rate. The first is India’s demography. India is experiencing a surge in its working-age population. The second factor is the economic reforms of early 1990’s in India. These economic reforms have unleashed an explosion of pent-up commercial energy and have led to the creation of a dynamic private sector in India. The third factor is that India has a large domestic demand due to which it is relatively less prone to ups and downs of the international trade.
India’s demographic profile indicates that one hundred million people are likely to join the workforce by 2020, which will also lead to a decrease in dependency ratio. World Trade Organization [WTO] (2010) predicts that India will account for a quarter of the increase in world’s labor force over the next 20 years (India, 2010). This increase in population can lead to higher savings and better productivity, which in turn will create an even more vibrant consumer culture and boost investment of all kinds. It is important to note that the demographic dividend was the driving force of the Middle Kingdom’s turbocharged economic growth (Sharma, 2010).
Furthermore, Indian government introduced economic reforms in early 1990s. Tariffs were cut down drastically. Government lessened its control over private businesses. Private firms were