Assess the General Direction of the Political and Economic Policies Being Followed in Order to Develop the Country (India)

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Q3: Assess the general direction of the political and economic policies being followed in order to develop the country.

Rapid growth since 1980 has transformed India from the world’s 50th ranked economy in nominal U.S. dollars to the 10th largest in 2005. When income is measured with regard to purchasing power parity, the Indian economy occupies fourth place, after the United States, Japan, and China. Along with growing incomes, India’s increasingly outward orientation makes it an important player in the global economy and the growing optimism about India’s economy has led to a surge in international investors’ interest. Further growth acceleration since 2003 has shifted the debate from a concern about the ability to sustain an annual growth rate of 6 percent to the prospects for increasing this growth rate to 8 percent (Ahmed 2007, Commission on growth and development, Battles Half Won: The Political Economy of India’s Growth and Economic Policy since Independence).
The down turn in the economy that appears to have begun in the USA in September, 2008 has had some negative impact on the Indian economy. The most immediate effect of this global financial crisis on India is an out flow of foreign institutional investment (FII) from the equity market. This withdrawal by the FIIs led to a steep depreciation of the rupee. The banking and non-banking financial institutions have been suffering losses. The recession that generated the financial crisis in USA and other developed economies have adversely affected India’s exports of software and IT services. For fighting this crisis, the government of India responded through its monetary policy by pumping the liquidity into the system rather than using effective fiscal policy i.e. public expenditure and investment to face the recession (International Journal of Trade, Economics and Finance, Vol. 2, No. 3, June 2011).
The…...

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