Indian Economy Situation Similar To 1991 – No Easy Solutions For Incoming Govt

Very relevant in today’ time…

Economics And India

Indian economy grew strongly till 2007-08 and then sputtered

Since the initial set of reforms in 1991, Indian economy has increasingly dependent on the global economic scenario in past 2 decades. From 2003-08, Indian economy grew at a strong pace primarily assisted by growth in global economy and liquidity flows. Low inflation levels during the period and focus on lower fiscal deficit in early part of the decade ensured that the country had fiscal stimulus measures in place when the economic crisis of 2008 struck.


The crisis resulted in global economy slumping which had a similar effect on India. Thereafter, in order to boost growth, Indian government embarked on a fiscal stimulus package which resulted in economic growth going back to ~ 8-9% by 2011. This also resulted in significant increase in fiscal deficit from ~ 3.5% in Fy2008 to ~ 6.5% in Fy2009.


However, not removing the extra stimulus…

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