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Flawed Policies are Responsible for Low Growth Rate

February 28, 2014 by AmbitionIAS Leave a Comment

Flawed policies responsible for low growth rate

  • According to BJP Leader Yashwant Sinha, UPA government’s consumer-centric strategies that were adopted during the economic depression of 2008–09, are responsible for reduced growth rate and high inflation.
  • At that time, the UPA government had reacted to the crisis with the “unrestrained and unrestricted” fiscal expansion.
  • The economy which was then growing at more than 8% started its deep fall due to the insufficient economical investments. Today, government is happy with just 4.5% growth rate.
  • He further added that this growth rate has been achieved due to the good monsoon, and not due to the sound economic policies of government. The imperfect policies have led to the burden on the RBI (Reserve Bank of India), and so the interest rates had to be raised several times.
  • It had started a “brutal cycle” of high inflation, low investment, increasing interest rates, and low growth, thereby forming the “sense of depression” in the economy.
  • The improvement in this situation can be done by modifying the macro-economic strictures and sector-specific strategies, keeping lower inflation rates, and by reducing the interest rates.
  • There were a lot of flaws in the foreign policy, due to which the relationship between India and the US started to deteriorate, and it was not just because of the diplomatic issues. He said that the ties with China deserve better approach. 

Exams Perspective:

  1. Gross Domestic Product (GDP)
  2. Foreign Direct Investment (FDI)
  3. Inflation

Filed Under: Current Affairs, Economy, National Tagged With: Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Inflation

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