Challenges for Growth; Convergence and Divergence of Indian Economy

Abstract

Indian economic performance since independence to 1970s is characterized as disappointing growth, but not disastrous outcome. Nevertheless, since 1980 growth rate has doubled from 1.7 percent in 1950-1980 to 3.8% in 1980-2000. Arvind Subramanian posited that India is cited as a singular exemplar of how pro-business attitude as a political scheme to conform to political exigencies graduated to pro-competitive posture to face balance of payment crisis in 1991, transformed predominantly agrarian economy to a service economy without considering the route of the manufacturing sector. The internal liberalization to rationalization of the licensing and permit raj mostly handled by bureaucrats and external liberalization by policy makers from 1980-2000 did change the image of India as an engine for the world’s economic growth. The important social, political and economic indicators are discussed for future analysis to find role of income and social inequalities that are likely to impede the process of convergence.