Economic Growth Rate in India : Issues and Concerns Presented in One Day Workshop on ‘Economic Growth Rate in India’ on 30.03.2016 organized by Department of Economics, Mannar Thirumalai Naicker College, Madurai

1. Economic Growth Rate in India
Issues and Concerns
Dr. C. Muthuraja
Dean, Curriculum Development & Research &
Head, Research Department of Economics
The American College, Madurai - 625 002
(cmuthuraja@gmail.com) - (M-09486373765)
(Presented in One Day Workshop on ‘Economic Growth Rate in India’ on 30.03.2016
organized by Department of Economics, Mannar Thirumalai Naicker College, Madurai)
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2. CONTENTS
♦ INTRODUCTION
♦ Economic Growth Rate
♦ Background & Importance
♦ Economic Growth Rate Since 1950
♦ Method of Calculation
♦ How Is The GDP Of India Calculated?
♦ Issues
♦ GDP CANNOT BE SOLE CRITERIA TO MEASURE !
♦ Concerns
♦ APPEAL
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3. Introduction
♦ Importance of Economic Growth
♦ Economic Growth vs Total Growth
♦ IE expanded 7.3 % , slowing from an upwardly
revised 7.7 percent growth in the previous quarter
♦ GDP Annual Growth Rate in India averaged 6.04
percent from 1951 until 2015
♦ Trade, hotels, transport and communication,
financing, insurance, real estate and business and
community, social and personal services : 60 % +
♦ Agriculture, forestry and fishing constitute around
12% - Employs more than 50% of the labor force
♦ Manufacturing: 15%, construction : 8% and mining,
quarrying, electricity, gas and water supply:5%
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4. Economic Growth Rate – Since 1950
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5. GDP – 2010- 2020 ?
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6. India vs China GDP
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7. How is the GDP of India Calculated?
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♦ GDP- Single standard indicator used across the
globe to indicate the health of an economy
♦ Policy makers, investors, economists, businesses,
bankers, politicians, and even the media keep a
close watch on GDP estimates
♦ GDP provides one single number that represents
the monetary value of all the finished goods and
services produced within a country's borders in a
specific time period
♦ GDP may be easy to define but it is complex to
calculate, and countries across the globe have
different methods to arrive at their country's GDP

8. GDP of India
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♦ The Data Collection Process : CSO-MOSPI is responsible for
macroeconomic data gathering & statistical record keeping-
processes- conducting an annual survey of industries and
compilation of various indexes like the Index of Industrial
Production, Consumer Price Index, etc
♦ GDP Calculation Process : First method is based on economic
activity (at factor cost), Second is based on expenditure (at
market prices)
♦ Eight industry sectors: Agriculture, forestry and fishing; Mining
and quarrying; Manufacturing; Electricity, gas and water
supply; Construction; Trade, hotels, transport and
communication; Financing, insurance, real estate and business
services; Community, social and personal services
♦ Timelines: Each quarter’s data released with a lag of 2 months
♦ The Bottom Line: To assess Performance- factor cost GDP
& expenditure-based GDP calculations

9. Issues on Economic Growth Rate
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♦ Inflation
♦ Poor educational standards
♦ Poor Infrastructure
♦ Balance of Payments deterioration.
♦ High levels of private debt
♦ Inequality has risen rather than decreased
♦ Large Budget Deficit
♦ Rigid labour Laws
♦ Inefficient agriculture
♦ Slowdown in growth

10. GDP CANNOT BE SOLE CRITERIA
TO MEASURE OVERALL GROWTH
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Economic Planner must work on
♦ Is spatial disparity a binding constraint to
growth and poverty reduction?
♦ Have spatial disparities in opportunities been a
serious constrains to achieving an equitable
growth?
♦ Do people have access to primary education
and affordable health services?
♦ Is the pattern of government budget allocation
equitable across regions and income groups?

11. Concerns: World Bank keeps faith in India story
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♦ Low inflation - Current account deficit to inch up to 1.4%
of GDP
♦ States now responsible for 57% of spending (16% of GDP)
against 46%
♦ Direct tax base narrow, contributes 5.7% of GDP against
11.2% - Indirect tax base reasonable, contributing 11.4%
of GDP against 16.4%
♦ Suggests bringing in alcohol, electricity, and real estate
under proposed GST
♦ Joining bigger regional trade agreement such as Regional
Comprehensive Economic Partnership to serve India’s
interests
♦ Both manufacturing and services need to create jobs

12. CONCERNS…
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♦ India's prospects relatively robust; to
grow at 7.2%: OECD
♦ Optimistic About India Growth
Prospects: IMF
♦ Big Infrastructure Plan
♦ Ease of Doing Business
♦ Focus on Agriculture
♦ Focus on Skill Development
♦ Enhanced Savings

13. APPEAL
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INDIAN / ECONOMICS EDUCATION
PLEASE
EACH ONE TEACH ONE
IF NOT
EACH ONE CATCH ONE AND
TEACH ONE

14. QUESTIONS PLEASE
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♦ QUESTIONABLE QUESTIONS

15. WWW.THANKS.COM
THANKING YOU
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