ECONOMIC GROWTH OF INDIA

Economic Growth of India



Economic Growth of India

Introduction

India is one of the countries which have the most rapid economic growth in the world. From 1990s, India went through a quick and rapid transformation to a globalized country from a socialist economic country of the post independence period. It is the second most populated country in the world with an overall populace of about 1.1 billion, also has the seventh largest land area which covers 3,287,590 sq. km, stretching from the Bay of Bengal in the east to the Arabian Sea in the west (Dwijendra, 2007, Pp. 79).

Although India's liberalization of economics is dated back to late 1970s, yet in earnest the reforms of economics started in July 1991. Stability of expenditures catastrophe during that era paved the means for an International Monetary Fund (IMF) plan which led to the implementation of a crucial reform package. Although the foreign exchange, reserve was retrieved rapidly and the temporary clout of the World Bank and IMF ended successfully while the reforms proceeded in a stop-go manner. India played an insignificant role in the World trade. This was the time for the government of India to adopt the globalization market driven economy and ditch the decade old central planning system. Privatization of industries encouraged the business. A vital part was played by both the foreign and indigenous private enterprises.

Liberalization Policy in India

In India, the liberalization of trade policy is considered to be the main decision that gave rise to the exports in India. The liberalization of the trade in the year 1991 provided the incentive to the private sector to promote the economic activities in the country by removing the restrictions. The restriction on the integration of the economic activity of private sectors along with the global economy was a main hurdle in the economic growth of the country's export sector.

According to Kravis (1970), the economic growth of the country leads to the good performance of the country's export, as well. If there is a rising level of GDP in the country, the exports of the country will also enhance. The active participation of the country in the global trade activities results, in the enhanced GDP growth of the country. However, the case of China disturbed the traditional rule that the large countries does not take an active role in the world trade and that the benefits of the trade cannot be entertained by them. China, being the large country whose exports and imports affect the world trade has actively participated in the world trade and raised the GDP level. Moreover, it has benefitted China in every way as the GDP level was increased in the country while the level of exports was significantly raised as well due to which the balance of payment was improved (Jumani and Tripathi , 2007, Pp. 79).

India's economy has rebounded strongly from the global recession and the economy will post growth rates close to trend growth over the next two ...