“What’s the state of the Indian economy, and what needs to be done?” asked K. Srinivas. The Indian economy is not doing too well but neither is it in dire straits. The rough indicator of the health of an economy is its GDP growth rate. It’s around 5 percent per year, which is not really robust for a country as poor as India. That rate would be fabulous for a rich country like the US, but for India it spells continued misery.
The government, of course, would like to claim a higher GDP growth rate and do so by manipulating the numbers. But quibbling over small numbers doesn’t buy you much. Regardless of whether it is 5 or 6, the bad news is that the economy is in trouble. Why is that so? Continue reading