Contradictions in Development : Growth and Crisis in Indian Economy

Abstract

Since the pro-market reforms were launched, the Indian economy has grown from 5% in the 1980s to around 10% in 2011 before slowing down dramatically to less than half that rate in recent years. From launching of reforms until 2011, it did manifest some vivid and impressive signs of India moving towards high growth and increase in living conditions of its population. The purpose of this article is to access the likely effects of the reform measures on economic growth and poverty. Because the mainstream approach suggests that the reforms can be expected to increase economic growth and incomes. It seems that India’s growth has been led by the services sector, which includes real estates, IT, telecommunications, and banking, which contributes nearly 50% to the GDP in 2012. Manufacturing, which experienced remarkable growth and transformation in the East Asian economies, had rather grown much slower. The agriculture sector, which still employs nearly two-third of the India’s workforce, remains stagnant. The study suggests that education and health have been neglected in India and this will compromise productivity and growth.