Asia Rising

Asia Rising

Growth and Resilience in an Uncertain Global Economy

Edited by Hal Hill and Maria Socorro Gochoco-Bautista

The centre of global economic activity is shifting rapidly towards Asia, driven by a combination of the economic dynamism of China, India and other middle-income Asian countries, and sluggish growth in the OECD economies. The rapid growth and rising global prominence has raised a range of major challenges for Asia and for the rest of the world. This comprehensive, forward-looking book examines these issues through in-depth studies of major Asian economies and an analysis of the key development policy options.

Chapter 10: India

Rajendra R. Vaidya

Subjects: asian studies, asian development, development studies, asian development

Extract

Achieving a high rate of growth of gross domestic product (GDP) and sustaining it over a prolonged period has been the chief aim of successive Indian governments over the last two decades. Maintaining moderate to low inflation has also been addressed by the government, but with much less frequency and vigor. In India, recent periods of high growth have been coupled with high inflation. The government has been quick to take credit for high growth rates, but is reluctant to accept blame for high inflation – citing supply shocks, which it says are outside its control. But high inflation is sure to have a moderating influence on growth in the near future, leading to concerns about the economy’s ability to sustain high GDP growth rates. Economists know that a rather complicated relationship exists between trade, investment, and growth and that the specifics of this relationship are likely to be unique for each country. This has made it difficult to arrive at universal agreement on policy choices for realizing sustainable growth.

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