There has been a tremendous fluctuation in the growth of India's economy. India's growth has dropped from a rocket rate of 9 percent to a shocking low of 5 percent. This is the lowest since March 2009 and the slump in growth is even more pronounced when figures are compared with those of China.
The main reasons behind this are weak growth in India's industrial sector, the complex policies surrounding direct foreign investment and that there is no incentive given to entrepreneurs. Indonesia, on the other hand, has replaced India to become the second largest growing economy due to its domestically driven policy as well as increasing its export rate manifold.
Lack of political will and vision are mainly responsible for economic backwardness and there is a dire need for political consensus in moving the country forward without looking into the vote-bank. The policies which are drafted should also be implemented in the right manner.
Inflation, on the other hand, is at 7.45 which is still way above the RBI's comfort zone of 5.5-6. The demand for exports is not very strong and this has also impacted the downturn in India's growth. The main reason behind India's unsteadiness in its growth rate is due to its dependence on a few developed states which have overall been playing a significant role in improving the growth rate figure.The federal government should simultaneously help the underdeveloped states and assist them to a grow in a sustainable manner which will help in relaxing the fluctuation. There is a huge potential in these underdeveloped states which, if harnessed, could push growth significantly.
Author: Ajay Pal Singh Chabba/ RESET editorial