Is India's Long-Term Trend Growth Declining?
Patnaik, Ila; Pundit, Madhavi | December 2014
Abstract
The recent decline in gross domestic product (GDP) growth in India raised a debate about whether it is a trend or a business cycle slowdown. We observe a cyclical downturn post-global financial crisis due to external and domestic conditions. With global recovery strengthening and appropriate demand management policies, the business cycle downturn can be reversed. At the same time, the economy witnessed negative shocks to trend growth caused by policy uncertainty. In this paper, we argue that these shocks are temporary. A stable policy environment can give positive shocks to growth. Policy action eliminating frictions that hamper efficient allocation of resources in factor markets can be seen as a positive shock that will pull up trend growth of output. Given that the supply of factors, namely labor, human capital, infrastructure, and non-infrastructure capital appears robust and productivity growth potentially strong, timely reforms that eliminate structural bottlenecks will enable trend growth to pick up.
Citation
Patnaik, Ila; Pundit, Madhavi. 2014. Is India's Long-Term Trend Growth Declining?. © Asian Development Bank. http://hdl.handle.net/11540/4219. License: CC BY 3.0 IGO.ISSN
2313-6537
Keywords
Comprehensive Development Framework
Development Challenges
Development Planning
Millennium Development Goals
Policy Development
Program Evaluation
Performance Evaluation
Evaluation Criteria
Capital Market Development
Development Economics
Financial Sector Development
Technology Development
World Development Indicators
Evaluation Methods
Development assistance
ADB
Curriculum development
Development assistance
Development aid
Development indicators
Development potential
Development models
Project appraisal
Performance appraisal
Economic development
Economic indicators
Government programs
Economic growth
Economic policy
Industrial development
Industrial policy
Technology assessment
Economic evaluation
Economic forecast
Input output analysis
Communication in rural development
Communication in community development
Infrastructure
Central planning
Endowment of research
Partnership
Joint venture
Nation-building
Risk assessment
Economic development projects
Economic forecasting
Industrial research
Participatory monitoring and evaluation
Economic policy
Economic forecasting
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Citable URI
http://hdl.handle.net/11540/4219Metadata
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