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Economic Survey-Ch 02
Economic Survey-Ch 02
Micro-foundations of
Inclusive Growth
CHAPTER
There have been few fiscal years in Indias history in which the outlooks at the start
and the end have been as different as in the present one. In April 2009, India seemed
to be mired in an economic slowdown that had begun over a year ago in the
industrialized nations and had engulfed the entire world. During the two preceding
quarters India had clocked an annualized growth rate of 5.8 per cent, which was
much below the near-9 per cent that the nation had continuously achieved for five
years. It appeared that while we were a little late in joining the global recession we
were now firmly in it. A variety of stimulus packages were put in place in the second
half of 2008-09, in the Interim Budget 2009-2010 and, again, three months later,
in the main Budget 2009-2010. By the second quarter the economy showed signs of
turning; and now, close to the end of the year, India seems to be rapidly returning to
the buoyant years preceding 2008. As always with any economy, there are risks.
The drought-hit agricultural sector is not yet back to normal performance. The risk
of a second-dip recession in the industrialized nations continues to cast a shadow on
our nascent recovery. Nevertheless, at the years end, it is good to see India having
averted a recession and come out of the slowdown faster than pundits predicted in
April 2009; and an analysis of various statistical trends that gird the economy
suggests that the nations medium- and long-term prognosis is excellent. If we can
put into effect some important structural policy measures, there is no reason why
India cannot achieve double-digit gross domestic product (GDP) growth and a rapid
diminution of poverty.
DEVELOPMENT
AND
DISTRIBUTION
22
1975
1984
1994
2004
58
Paraguay
75
Grenadines
Dominican Rep.
Dominican Rep.
China
Honduras
Zimbabwe
India
77
80
Ghana
Sri Lanka
China
Georgia
Mauritania
Solomon Islands
India
89
Solomon Islands
India
Georgia
Bangladesh
90
India
Rwanda
Senegal
Solomon Islands
96
Bangladesh
China
Congo,Dem.Rep.
Burkina Faso
108
China
Nigeria
Rwanda
Malawi
23
1983
1987-88
1993-94
1999-2000
2004-05
68.89
71.17
78.27
77.95
84.55
90.35
Quintile
Consumption Expenditure
(at 1977-78 Prices, in Rs)
29.14
31.43
35.91
37.29
42.79
44.91
Source: S. Subramanian, A Practical Proposal for Simplifying the Measurement of Income Poverty, in
K. Basu and R. Kanbur (eds): Arguments for a Better World: Essays in Honour of Amartya Sen, Volume 1: Ethics,
Welfare, and Measurement. Oxford University Press: Clarendon, 2009.
Note : The price index employed is the CPIAL. The base year is taken to be 1977-78.
24
THE CHALLENGE
OF
POVERTY
25
26
27
28
Country
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Brazil
Chile
China
India
Indonesia
Japan
Malaysia
Mexico
Pakistan
Russian Fed.
Singapore
Sri Lanka
Thailand
USA
Ease of
doing
business
(rank)
How many
days to
start a
business
(days)
Days to
enforce a
contract
(days)
Time to
close a
business
(years)
Days to
export
129
49
89
133
122
15
23
51
85
120
1
105
12
4
120
27
37
30
60
23
11
13
20
30
3
38
32
6
616
480
406
1,420
570
360
585
415
976
281
150
1,318
479
300
4.0
4.5
1.7
7.0
5.5
0.6
2.3
1.8
2.8
3.8
0.8
1.7
2.7
1.5
12
21
21
17
21
10
18
14
22
36
5
21
14
6
29
Places in India
Ease of
doing
business
(rank)
How many
days to
start a
business
(days)
Days to
enforce a
contract
(days)
Time to
close a
business
(years)
Days to
export
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Ludhiana
Hyderabad
Bhubaneshwar
Gurgaon
Ahmedabad
New Delhi
Jaipur
Guwahati
Ranchi
Mumbai
Indore
Noida
Bengaluru
Patna
Chennai
Kochi
Kolkata
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
33
33
37
33
35
32
31
38
38
30
32
30
40
37
34
41
36
862
770
735
1,163
1,295
900
1,033
600
985
1,420
990
970
1,058
792
877
705
1,183
7.3
7
7.5
7
6.8
7
9.1
8.3
8.5
7
8
8.7
7.3
9.3
7.5
7.5
10.8
21
26
17
25
17
25
22
22
21
17
21
25
25
19
25
28
20
30
31
AND
32
Figure 2.1
22
All
commdities
(wt.100%)
20
18
16
Food
inflation (wt.
25.43%)
14
10
Non-food
inflation (wt.
74.57%)
8
6
4
2
0
-2
-4
-6
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Per cent
12
2006-07
2007-08
2008-09
Year
2009-10
33
34
AND
35
A MISCELLANY
OF
CONCERNS
36