Socio-EconomicStudy and Globalization
Today,India is the fastest developing large economy in the globe since itovertook China in 2015 (Sinha,2015).The IMF predicts that India may retain this status until the year2020. According to Smith(2015), thenation has a high GDP growth of 7%. India has the third largesteconomy in the globe due to its large population which provides aready market and a GDP of more than 2.1 trillion U.S. dollars. TheIndian Gross Domestic Product (GDP) increased in mid 2016 than theprevious quarter by about 1.4%. The average growth rate of thenation’s GDP from 1996-2016 was 1.67%. The highest recorded ratewas 5.8% in the second quarter of the year 2009 while the lowestrecord was a negative 1.8% in the first quarter of 2009.
Theintroduction of the concept of the free market in 1991 saw the rapidtransformation of the Asian economy, while further growth has beenpredicted (Smith,2015).In 2011, India earned the eleventh position in the global rankregarding the nominal GDP and the fourth position regarding GDPpurchasing power parity (PPP). India has a high population as wellas a booming manufacturing sector and sound economic policies thatpropel its economic growth (Papola,2013).These principles are meant to reduce the rates of expenditure andincrease the savings. These reserves are then invested in the vitalsectors and hence boosting the economic growth.
Accordingto Sinha(2015), someof the factors that propagate the growth of the Indian economyinclude the nature of the capital flows and the stock exchangemarket. The Indian economy has a constant stream of resources fromboth the foreign trade and the local investments. The nation`s stockmarket has been performing exceptionally well which has increased itscapital gains (Sinha,2015).India has an enormous amount of capital inflows that would be usefulin case the country’s GDP growth reduces, for instance when thecurrency gets overvalued.
Indiais an exporter of oil which is an essential commodity in the world’seconomy (Sinha,2015).Sales of oil generate revenue for the nation, but the income variesaccording to the world prices of the crude oil. When there arefluctuations in the crude oil prices, it leads to an unstable Indiancurrency. India has one of the highest populations in the world,while projections estimate further growth by the year 2030 (Smith,2015).This large population offers a ready market for the commoditiesproduced by the economy as well as challenging the business to growand attain the capacity of meeting the needs of the whole population.
Anotherfactor influencing India’s growth is the political environment.There have been a lot of political leadership variations in thecountry where each regime implements its policies regarding thetaxes, exports, and imports (Sinha,2015).The implementation of sound regulations by the country’s policymaker has resulted in increased rates of local and foreign investorswho propel the economic growth of the nation. Some of the sectorswhose growth has propagated the economic development of the countryinclude the agriculture, fishing and forestry sector which grew byabout 1.2% in the year 2015 to 2016 (Smith,2015).There are significant improvements in the trade, tourism, transportand communication areas that generate revenue in the country.
Apossible explanation for the heightened private consumption can beassociated with the high rates of dividends advanced to the companiesthan increased rates of investments (Sinha,2015).The slow production of capital goods and lack of value-additionpractices remain the main factors hindering the growth of India.
Sinha,A. (2015). Modeling energy efficiency and economic growth: evidencesfrom India. InternationalJournal of Energy Economics and Policy,5(1),96.
Smith,L. C. (2015). The great Indian calorie debate: Explaining risingundernourishment during India’s rapid economic growth. FoodPolicy, 50,53-67.
Papola,T. S. (2013). Roleof labour regulation and reforms in India: country case study onlabour market segregation (No.483335). International Labour Organization.