Does India’s Economy in the Fifth Stage of Development? A Post 2007-08 Crisis Analysis

Abstract

Earlier studies by Panagaria (2008) and Bhat (2013) have categorized the economic development of India into four phases based on the social, political, and economic parameters from 1951 to 2006. Considering the economic performance and global financial crisis of 2007-08, this paper analyses the fifth stage of economic development. Apart from the earlier studies, it analyzed global economic outlooks to trace the shrinking growth rate in GDP, industry, and the manufacturing sector. The first phase of economicdevelopment in India since independence followed a liberal regime and accounted for a GDP growth rate of 4.1 percent. The second phase experienced restrictive policies and adopted an ‘indigenous non-availability import system’, and the end result was a drop in the growth rate. Hence, it adopted relatively liberal policies in the third phase and systematic liberalization was enacted in the fourth phase. The liberalization policies resulted in an accelerated growth rate in all sectors and continued until the economic crisis of 2007-08. In addition to the earlier studies, this paper considers the post-crisis period as the fifth phase of economic development, where the economy experienced a remarkable increase in the GDP growth rate resulting from the surge in the service sector and a significant drop in the industrial sector. It appears that industrial growth rates were revoked due to the continued fall in export demand and foreign capital outflows in the post-crisis period.