Economic Management of India and Its Growth Rate

Surendra K. Kaushik¹, Shyam S. Lodha^2
(1. Lubin School of Business, Pace University, NY 10606, USA;
2. Department of Marketing, School of Business, Southern Connecticut State University, New Haven, Connecticut, USA)

Abstract: Gross domestic product (GDP) growth in India, in the long run, will tend to converge around the long-term annual average of 4 percent to 5 percent. This article attempts to explain India’s growth rate in terms of a Pyramid Model of Growth Process. The pyramid model is layered with credibility, credit, capital and confidence. When all elements in the layers are in place the economy achieves high rate of growth in a circular flow functioning of a market economy. The missing elements are: (a) a better industrial and manufacturing policy (b) a better business environment (c) better policies and linkages with international financial markets to attract more FDI and portfolio investments (d) less corruption and bureaucracy (e) timely performance of contractual obligations and (f) quality control for better products and services. Until then India will remain in the 5 to 6 percentage in the long run.

Key words: India; growth; pyramid model; credibility; credit; capital; confidence

JEL code: E2