Summary: Economic Survey (Volume 1) 2018-19 | Indian Economy for State PSC Exams - BPSC (Bihar) PDF Download

 Page 1


 
                 
 
 
  
 
 
Economic Survey 
Chapter wise
 
 
                 
 
 
Economic Survey –Volume 1
Chapter wise summary document
 
 
          
  
Volume 1 
ummary document 
           
Page 2


 
                 
 
 
  
 
 
Economic Survey 
Chapter wise
 
 
                 
 
 
Economic Survey –Volume 1
Chapter wise summary document
 
 
          
  
Volume 1 
ummary document 
           
 
                 
 
 
 Volume 1 of Economic Survey (2018
Topics covered:-  
1. Private investment as key driver
 
2. Behavioral economics 
? Its principles 
? Nudging in policy making 
? Global examples
? Nudging in Indian polices  
? Prospects of Nudging for future policy making 
 
3. Dwarfism in manufacturing sector 
 
4. Data to be public good
 
5. Need for Judicial reforms…………………………………………………………………………..
 
6. Impact of policy uncertainty on Investment and way forward……………………
 
7. India’s demographic projections……………………………………………………………….
 
8. Analysis of Swachh Bharath Mission………………………………………………………….
 
9. Energy Scenario – Efficiency, Potential for renewable energy, EVs…………….
 
10. Use of Technology in welfare schemes 
 
11. Minimum wage system in India
 
 
 
  
                 
Volume 1 of Economic Survey (2018-19) 
Private investment as key driver………………………………………………………………
Behavioral economics ……………………………………………………………………………
Nudging in policy making  
Global examples 
Nudging in Indian polices   
Prospects of Nudging for future policy making  
Dwarfism in manufacturing sector – its impact and solution……………………..
Data to be public good……………………………………………………………………………….
Need for Judicial reforms…………………………………………………………………………..
Impact of policy uncertainty on Investment and way forward……………………
projections……………………………………………………………….
Analysis of Swachh Bharath Mission………………………………………………………….
Efficiency, Potential for renewable energy, EVs…………….
Use of Technology in welfare schemes – MGNREGA (case study)………………41
ge system in India- status, problems, way forward………………
  
 
 
………………………………………………………………….1  
…………………………………………………………………………………4 
……………………..14 
……………………………………………………………………………….19  
Need for Judicial reforms…………………………………………………………………………..24 
Impact of policy uncertainty on Investment and way forward……………………28 
projections………………………………………………………………..30 
Analysis of Swachh Bharath Mission………………………………………………………….33 
Efficiency, Potential for renewable energy, EVs…………….35 
………………41 
status, problems, way forward……………….44 
Page 3


 
                 
 
 
  
 
 
Economic Survey 
Chapter wise
 
 
                 
 
 
Economic Survey –Volume 1
Chapter wise summary document
 
 
          
  
Volume 1 
ummary document 
           
 
                 
 
 
 Volume 1 of Economic Survey (2018
Topics covered:-  
1. Private investment as key driver
 
2. Behavioral economics 
? Its principles 
? Nudging in policy making 
? Global examples
? Nudging in Indian polices  
? Prospects of Nudging for future policy making 
 
3. Dwarfism in manufacturing sector 
 
4. Data to be public good
 
5. Need for Judicial reforms…………………………………………………………………………..
 
6. Impact of policy uncertainty on Investment and way forward……………………
 
7. India’s demographic projections……………………………………………………………….
 
8. Analysis of Swachh Bharath Mission………………………………………………………….
 
9. Energy Scenario – Efficiency, Potential for renewable energy, EVs…………….
 
10. Use of Technology in welfare schemes 
 
11. Minimum wage system in India
 
 
 
  
                 
Volume 1 of Economic Survey (2018-19) 
Private investment as key driver………………………………………………………………
Behavioral economics ……………………………………………………………………………
Nudging in policy making  
Global examples 
Nudging in Indian polices   
Prospects of Nudging for future policy making  
Dwarfism in manufacturing sector – its impact and solution……………………..
Data to be public good……………………………………………………………………………….
Need for Judicial reforms…………………………………………………………………………..
Impact of policy uncertainty on Investment and way forward……………………
projections……………………………………………………………….
Analysis of Swachh Bharath Mission………………………………………………………….
Efficiency, Potential for renewable energy, EVs…………….
Use of Technology in welfare schemes – MGNREGA (case study)………………41
ge system in India- status, problems, way forward………………
  
 
 
………………………………………………………………….1  
…………………………………………………………………………………4 
……………………..14 
……………………………………………………………………………….19  
Need for Judicial reforms…………………………………………………………………………..24 
Impact of policy uncertainty on Investment and way forward……………………28 
projections………………………………………………………………..30 
Analysis of Swachh Bharath Mission………………………………………………………….33 
Efficiency, Potential for renewable energy, EVs…………….35 
………………41 
status, problems, way forward……………….44 
                        
                                    
Chapter 1: Shifting gears: Private investment as key 
driver  
India is aspiring to become a USD 5 trillion economy
trillion economy by 2032. Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
parameters to be managed to achieve these targets.
What has been the status of macro
Analyzing the stability with respect to following macro
? Growth rate - World output grew at 3.6 per cent in 2014 and again in 
2018. India became 6
th
 largest economy by sustaining growth rates 
higher than China, thereby 
economy in the world. 
? Inflation - Average in?ation in these five years was less than half the 
in?ation level of the preceding five year, 
Committee (MPC) since 2015
? Current account deficit (CAD)
projected at 2.4 per cent of GDP in 2018
2017-18, this is within reasonable levels
? Foreign exchange reserves
billion. 
? Fiscal Deficit – Gross Fiscal
4.5 per cent in 2013-14 to 3.4 p
key role in reduction. 
So, if India aims to grow into a USD 5 trillion economy by 2024
make India the third-largest economy
growth rate in GDP of 8 %, given at 
follows naturally is - 
What are the ingredients of a model that can generate such growth?
Such a growth model should be driven by a 
investment and exports, catalysed and supported by a 
demographic phase.  
China has relied primarily on savings and investment. 
investment-driven economy even t
rates reaching about 45% of GDP even in 2017
that savings, investment and GDP
the high growth economies, be it China or other East Asian economies.
So, for such growth model, we need 
? Savings – In India savings were at peak 
                          SUMMARY DOCUMENT                                                 
                                            
Shifting gears: Private investment as key 
USD 5 trillion economy by 2024-25 and USD 10 
Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
achieve these targets. 
What has been the status of macro-economic stability in last 5 years? 
Analyzing the stability with respect to following macro-economic variables:-  
World output grew at 3.6 per cent in 2014 and again in 
largest economy by sustaining growth rates 
higher than China, thereby becoming the fastest growing major 
?ation in these five years was less than half the 
l of the preceding five year, due to role Monetary Policy 
since 2015. 
(CAD) - Though the current account deficit is 
projected at 2.4 per cent of GDP in 2018-19, up from 1.8 per cent in 
18, this is within reasonable levels. 
Foreign exchange reserves rose to all-time highs crossing USD400 
Fiscal Deficit (GFD) to GDP ratio declined from 
14 to 3.4 per cent in 2018-19. FRBM Act played 
USD 5 trillion economy by 2024-25, which will 
largest economy in the world, it requires real annual 
given at 4 % in?ation. Next question which 
What are the ingredients of a model that can generate such growth? 
Such a growth model should be driven by a virtuous cycle of savings, 
investment and exports, catalysed and supported by a favourable 
China has relied primarily on savings and investment. China remains an 
driven economy even today with its investment and savings 
rates reaching about 45% of GDP even in 2017. Further research suggests 
that savings, investment and GDP growth have grown in a virtuous cycle in 
the high growth economies, be it China or other East Asian economies. 
for such growth model, we need following:-   
In India savings were at peak of 38.3 % in 2007-08 before 
                                                          
   
 
 
1 
Widening of the current 
account deficit has been 
driven by a 
deterioration of trade 
deficit from 6.0 per cent 
of GDP to 6.7 per cent 
across the two years. 
Rise in crude prices in 
Q4 of 2018-19 and a 
decline in the growth of 
merchandize exports 
have led to the 
deterioration of trade 
deficit. 
Page 4


 
                 
 
 
  
 
 
Economic Survey 
Chapter wise
 
 
                 
 
 
Economic Survey –Volume 1
Chapter wise summary document
 
 
          
  
Volume 1 
ummary document 
           
 
                 
 
 
 Volume 1 of Economic Survey (2018
Topics covered:-  
1. Private investment as key driver
 
2. Behavioral economics 
? Its principles 
? Nudging in policy making 
? Global examples
? Nudging in Indian polices  
? Prospects of Nudging for future policy making 
 
3. Dwarfism in manufacturing sector 
 
4. Data to be public good
 
5. Need for Judicial reforms…………………………………………………………………………..
 
6. Impact of policy uncertainty on Investment and way forward……………………
 
7. India’s demographic projections……………………………………………………………….
 
8. Analysis of Swachh Bharath Mission………………………………………………………….
 
9. Energy Scenario – Efficiency, Potential for renewable energy, EVs…………….
 
10. Use of Technology in welfare schemes 
 
11. Minimum wage system in India
 
 
 
  
                 
Volume 1 of Economic Survey (2018-19) 
Private investment as key driver………………………………………………………………
Behavioral economics ……………………………………………………………………………
Nudging in policy making  
Global examples 
Nudging in Indian polices   
Prospects of Nudging for future policy making  
Dwarfism in manufacturing sector – its impact and solution……………………..
Data to be public good……………………………………………………………………………….
Need for Judicial reforms…………………………………………………………………………..
Impact of policy uncertainty on Investment and way forward……………………
projections……………………………………………………………….
Analysis of Swachh Bharath Mission………………………………………………………….
Efficiency, Potential for renewable energy, EVs…………….
Use of Technology in welfare schemes – MGNREGA (case study)………………41
ge system in India- status, problems, way forward………………
  
 
 
………………………………………………………………….1  
…………………………………………………………………………………4 
……………………..14 
……………………………………………………………………………….19  
Need for Judicial reforms…………………………………………………………………………..24 
Impact of policy uncertainty on Investment and way forward……………………28 
projections………………………………………………………………..30 
Analysis of Swachh Bharath Mission………………………………………………………….33 
Efficiency, Potential for renewable energy, EVs…………….35 
………………41 
status, problems, way forward……………….44 
                        
                                    
Chapter 1: Shifting gears: Private investment as key 
driver  
India is aspiring to become a USD 5 trillion economy
trillion economy by 2032. Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
parameters to be managed to achieve these targets.
What has been the status of macro
Analyzing the stability with respect to following macro
? Growth rate - World output grew at 3.6 per cent in 2014 and again in 
2018. India became 6
th
 largest economy by sustaining growth rates 
higher than China, thereby 
economy in the world. 
? Inflation - Average in?ation in these five years was less than half the 
in?ation level of the preceding five year, 
Committee (MPC) since 2015
? Current account deficit (CAD)
projected at 2.4 per cent of GDP in 2018
2017-18, this is within reasonable levels
? Foreign exchange reserves
billion. 
? Fiscal Deficit – Gross Fiscal
4.5 per cent in 2013-14 to 3.4 p
key role in reduction. 
So, if India aims to grow into a USD 5 trillion economy by 2024
make India the third-largest economy
growth rate in GDP of 8 %, given at 
follows naturally is - 
What are the ingredients of a model that can generate such growth?
Such a growth model should be driven by a 
investment and exports, catalysed and supported by a 
demographic phase.  
China has relied primarily on savings and investment. 
investment-driven economy even t
rates reaching about 45% of GDP even in 2017
that savings, investment and GDP
the high growth economies, be it China or other East Asian economies.
So, for such growth model, we need 
? Savings – In India savings were at peak 
                          SUMMARY DOCUMENT                                                 
                                            
Shifting gears: Private investment as key 
USD 5 trillion economy by 2024-25 and USD 10 
Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
achieve these targets. 
What has been the status of macro-economic stability in last 5 years? 
Analyzing the stability with respect to following macro-economic variables:-  
World output grew at 3.6 per cent in 2014 and again in 
largest economy by sustaining growth rates 
higher than China, thereby becoming the fastest growing major 
?ation in these five years was less than half the 
l of the preceding five year, due to role Monetary Policy 
since 2015. 
(CAD) - Though the current account deficit is 
projected at 2.4 per cent of GDP in 2018-19, up from 1.8 per cent in 
18, this is within reasonable levels. 
Foreign exchange reserves rose to all-time highs crossing USD400 
Fiscal Deficit (GFD) to GDP ratio declined from 
14 to 3.4 per cent in 2018-19. FRBM Act played 
USD 5 trillion economy by 2024-25, which will 
largest economy in the world, it requires real annual 
given at 4 % in?ation. Next question which 
What are the ingredients of a model that can generate such growth? 
Such a growth model should be driven by a virtuous cycle of savings, 
investment and exports, catalysed and supported by a favourable 
China has relied primarily on savings and investment. China remains an 
driven economy even today with its investment and savings 
rates reaching about 45% of GDP even in 2017. Further research suggests 
that savings, investment and GDP growth have grown in a virtuous cycle in 
the high growth economies, be it China or other East Asian economies. 
for such growth model, we need following:-   
In India savings were at peak of 38.3 % in 2007-08 before 
                                                          
   
 
 
1 
Widening of the current 
account deficit has been 
driven by a 
deterioration of trade 
deficit from 6.0 per cent 
of GDP to 6.7 per cent 
across the two years. 
Rise in crude prices in 
Q4 of 2018-19 and a 
decline in the growth of 
merchandize exports 
have led to the 
deterioration of trade 
deficit. 
                        
 
falling back to 30.5% in 2017
perhaps not as urgent as reviving 
18). 
 
? Investment – was at peak of 
in 2017-18.Investment, especially private investment, is the “key 
driver” that drives demand, creates capacity, increases labour 
productivity, introduces new technology, allows 
and generates jobs. - that can create a self
India. 
 
? Job (labour intensive vs capital intensive)
that high investment rate will substitute labour. This thinking has led 
to much debate about labour
of production. However, the 
country with the highest investment rates also created the most jobs.
 
The misconception arises from a view buried in the silo of a 
activity. When examined in the full value chain, capital investment 
fosters job creation as capital goods production, research and 
development, and supply chains also generate jobs. International 
evidence also suggests that capital and labour are complementary 
when high investment rate drives growth.
 
? Exports - World trade is curren
share in global exports is so low that it should focus on market share. 
Capital investment enhances 
enhances export performance. Therefore, investment becomes crucial 
to enhancing export performance.The High Level Advisory Group, 
chaired by Dr Surjit Bhalla,
India can enhance its exports.
 
? Favourable Demographic phase
What is the role of demographics in the “virtuous cycle
? India will remain in demographic dividend zone 
decades.  
? Working age population 
to about 60 % in 2041 of overall population. (Draw graph).
? Changes in growth of labour force
changes in the investment rate 
which demographics affects the economic growth. This has already 
seen with respect to China, SE Asian countries. 
                          SUMMARY DOCUMENT                                                 
            
30.5% in 2017-18. Mobilising saving are important but 
perhaps not as urgent as reviving investment (Economic survey 2017-
as at peak of 35.6% in 2007-08 before falling to 26.4 % 
Investment, especially private investment, is the “key 
driver” that drives demand, creates capacity, increases labour 
productivity, introduces new technology, allows creative destruction, 
that can create a self-sustaining virtuous cycle in 
r intensive vs capital intensive)- A general apprehension is 
that high investment rate will substitute labour. This thinking has led 
to much debate about labour-intensive versus capital-intensive modes 
of production. However, the Chinese experience illustrates how a 
country with the highest investment rates also created the most jobs. 
The misconception arises from a view buried in the silo of a specific 
activity. When examined in the full value chain, capital investment 
b creation as capital goods production, research and 
development, and supply chains also generate jobs. International 
evidence also suggests that capital and labour are complementary 
when high investment rate drives growth. 
orld trade is currently facing some disruptions, India’s 
share in global exports is so low that it should focus on market share. 
Capital investment enhances total factor productivity, which in turn 
enhances export performance. Therefore, investment becomes crucial 
g export performance.The High Level Advisory Group, 
Dr Surjit Bhalla, submitted its report in June 2019 on how 
e its exports. 
Favourable Demographic phase- discussed below. 
What is the role of demographics in the “virtuous cycle”? 
demographic dividend zone for over two 
population (20-59 years)- 50.5 % in 2011, will increase 
of overall population. (Draw graph). 
growth of labour force, changes in the savings rate, and 
changes in the investment rate are three plausible mechanisms by 
which demographics affects the economic growth. This has already 
seen with respect to China, SE Asian countries.  
                                                          
     
 
 
2 
Creative destruction 
can be described as the 
dismantling of long-
standing practices in 
order to make way for 
innovation 
Page 5


 
                 
 
 
  
 
 
Economic Survey 
Chapter wise
 
 
                 
 
 
Economic Survey –Volume 1
Chapter wise summary document
 
 
          
  
Volume 1 
ummary document 
           
 
                 
 
 
 Volume 1 of Economic Survey (2018
Topics covered:-  
1. Private investment as key driver
 
2. Behavioral economics 
? Its principles 
? Nudging in policy making 
? Global examples
? Nudging in Indian polices  
? Prospects of Nudging for future policy making 
 
3. Dwarfism in manufacturing sector 
 
4. Data to be public good
 
5. Need for Judicial reforms…………………………………………………………………………..
 
6. Impact of policy uncertainty on Investment and way forward……………………
 
7. India’s demographic projections……………………………………………………………….
 
8. Analysis of Swachh Bharath Mission………………………………………………………….
 
9. Energy Scenario – Efficiency, Potential for renewable energy, EVs…………….
 
10. Use of Technology in welfare schemes 
 
11. Minimum wage system in India
 
 
 
  
                 
Volume 1 of Economic Survey (2018-19) 
Private investment as key driver………………………………………………………………
Behavioral economics ……………………………………………………………………………
Nudging in policy making  
Global examples 
Nudging in Indian polices   
Prospects of Nudging for future policy making  
Dwarfism in manufacturing sector – its impact and solution……………………..
Data to be public good……………………………………………………………………………….
Need for Judicial reforms…………………………………………………………………………..
Impact of policy uncertainty on Investment and way forward……………………
projections……………………………………………………………….
Analysis of Swachh Bharath Mission………………………………………………………….
Efficiency, Potential for renewable energy, EVs…………….
Use of Technology in welfare schemes – MGNREGA (case study)………………41
ge system in India- status, problems, way forward………………
  
 
 
………………………………………………………………….1  
…………………………………………………………………………………4 
……………………..14 
……………………………………………………………………………….19  
Need for Judicial reforms…………………………………………………………………………..24 
Impact of policy uncertainty on Investment and way forward……………………28 
projections………………………………………………………………..30 
Analysis of Swachh Bharath Mission………………………………………………………….33 
Efficiency, Potential for renewable energy, EVs…………….35 
………………41 
status, problems, way forward……………….44 
                        
                                    
Chapter 1: Shifting gears: Private investment as key 
driver  
India is aspiring to become a USD 5 trillion economy
trillion economy by 2032. Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
parameters to be managed to achieve these targets.
What has been the status of macro
Analyzing the stability with respect to following macro
? Growth rate - World output grew at 3.6 per cent in 2014 and again in 
2018. India became 6
th
 largest economy by sustaining growth rates 
higher than China, thereby 
economy in the world. 
? Inflation - Average in?ation in these five years was less than half the 
in?ation level of the preceding five year, 
Committee (MPC) since 2015
? Current account deficit (CAD)
projected at 2.4 per cent of GDP in 2018
2017-18, this is within reasonable levels
? Foreign exchange reserves
billion. 
? Fiscal Deficit – Gross Fiscal
4.5 per cent in 2013-14 to 3.4 p
key role in reduction. 
So, if India aims to grow into a USD 5 trillion economy by 2024
make India the third-largest economy
growth rate in GDP of 8 %, given at 
follows naturally is - 
What are the ingredients of a model that can generate such growth?
Such a growth model should be driven by a 
investment and exports, catalysed and supported by a 
demographic phase.  
China has relied primarily on savings and investment. 
investment-driven economy even t
rates reaching about 45% of GDP even in 2017
that savings, investment and GDP
the high growth economies, be it China or other East Asian economies.
So, for such growth model, we need 
? Savings – In India savings were at peak 
                          SUMMARY DOCUMENT                                                 
                                            
Shifting gears: Private investment as key 
USD 5 trillion economy by 2024-25 and USD 10 
Before understanding how to achieve these 
targets, let’s have a look at macroeconomic variables, which are key 
achieve these targets. 
What has been the status of macro-economic stability in last 5 years? 
Analyzing the stability with respect to following macro-economic variables:-  
World output grew at 3.6 per cent in 2014 and again in 
largest economy by sustaining growth rates 
higher than China, thereby becoming the fastest growing major 
?ation in these five years was less than half the 
l of the preceding five year, due to role Monetary Policy 
since 2015. 
(CAD) - Though the current account deficit is 
projected at 2.4 per cent of GDP in 2018-19, up from 1.8 per cent in 
18, this is within reasonable levels. 
Foreign exchange reserves rose to all-time highs crossing USD400 
Fiscal Deficit (GFD) to GDP ratio declined from 
14 to 3.4 per cent in 2018-19. FRBM Act played 
USD 5 trillion economy by 2024-25, which will 
largest economy in the world, it requires real annual 
given at 4 % in?ation. Next question which 
What are the ingredients of a model that can generate such growth? 
Such a growth model should be driven by a virtuous cycle of savings, 
investment and exports, catalysed and supported by a favourable 
China has relied primarily on savings and investment. China remains an 
driven economy even today with its investment and savings 
rates reaching about 45% of GDP even in 2017. Further research suggests 
that savings, investment and GDP growth have grown in a virtuous cycle in 
the high growth economies, be it China or other East Asian economies. 
for such growth model, we need following:-   
In India savings were at peak of 38.3 % in 2007-08 before 
                                                          
   
 
 
1 
Widening of the current 
account deficit has been 
driven by a 
deterioration of trade 
deficit from 6.0 per cent 
of GDP to 6.7 per cent 
across the two years. 
Rise in crude prices in 
Q4 of 2018-19 and a 
decline in the growth of 
merchandize exports 
have led to the 
deterioration of trade 
deficit. 
                        
 
falling back to 30.5% in 2017
perhaps not as urgent as reviving 
18). 
 
? Investment – was at peak of 
in 2017-18.Investment, especially private investment, is the “key 
driver” that drives demand, creates capacity, increases labour 
productivity, introduces new technology, allows 
and generates jobs. - that can create a self
India. 
 
? Job (labour intensive vs capital intensive)
that high investment rate will substitute labour. This thinking has led 
to much debate about labour
of production. However, the 
country with the highest investment rates also created the most jobs.
 
The misconception arises from a view buried in the silo of a 
activity. When examined in the full value chain, capital investment 
fosters job creation as capital goods production, research and 
development, and supply chains also generate jobs. International 
evidence also suggests that capital and labour are complementary 
when high investment rate drives growth.
 
? Exports - World trade is curren
share in global exports is so low that it should focus on market share. 
Capital investment enhances 
enhances export performance. Therefore, investment becomes crucial 
to enhancing export performance.The High Level Advisory Group, 
chaired by Dr Surjit Bhalla,
India can enhance its exports.
 
? Favourable Demographic phase
What is the role of demographics in the “virtuous cycle
? India will remain in demographic dividend zone 
decades.  
? Working age population 
to about 60 % in 2041 of overall population. (Draw graph).
? Changes in growth of labour force
changes in the investment rate 
which demographics affects the economic growth. This has already 
seen with respect to China, SE Asian countries. 
                          SUMMARY DOCUMENT                                                 
            
30.5% in 2017-18. Mobilising saving are important but 
perhaps not as urgent as reviving investment (Economic survey 2017-
as at peak of 35.6% in 2007-08 before falling to 26.4 % 
Investment, especially private investment, is the “key 
driver” that drives demand, creates capacity, increases labour 
productivity, introduces new technology, allows creative destruction, 
that can create a self-sustaining virtuous cycle in 
r intensive vs capital intensive)- A general apprehension is 
that high investment rate will substitute labour. This thinking has led 
to much debate about labour-intensive versus capital-intensive modes 
of production. However, the Chinese experience illustrates how a 
country with the highest investment rates also created the most jobs. 
The misconception arises from a view buried in the silo of a specific 
activity. When examined in the full value chain, capital investment 
b creation as capital goods production, research and 
development, and supply chains also generate jobs. International 
evidence also suggests that capital and labour are complementary 
when high investment rate drives growth. 
orld trade is currently facing some disruptions, India’s 
share in global exports is so low that it should focus on market share. 
Capital investment enhances total factor productivity, which in turn 
enhances export performance. Therefore, investment becomes crucial 
g export performance.The High Level Advisory Group, 
Dr Surjit Bhalla, submitted its report in June 2019 on how 
e its exports. 
Favourable Demographic phase- discussed below. 
What is the role of demographics in the “virtuous cycle”? 
demographic dividend zone for over two 
population (20-59 years)- 50.5 % in 2011, will increase 
of overall population. (Draw graph). 
growth of labour force, changes in the savings rate, and 
changes in the investment rate are three plausible mechanisms by 
which demographics affects the economic growth. This has already 
seen with respect to China, SE Asian countries.  
                                                          
     
 
 
2 
Creative destruction 
can be described as the 
dismantling of long-
standing practices in 
order to make way for 
innovation 
                        
 
? Decline in the number of children 
promotes saving, as they must rely more on savings for retirement 
in comparison to previous generations. 
? Composition effect on Savings
occur between the ages of 40 to 65 
retirement. 
? Jobs that pay meaningful wages 
China, Wages affected saving rates)
Thus, ES makes a point, that savings is driven primarily by demographics 
and income growth. 
 
So, to achieve all these targets and virtuous cycle
ideas of:-  
? Utilising the principles of 
? Addressing the issue of Dwarfism
? Making data, a public good.
? Capacity building of Judiciary.
? Arresting policy uncertainty
? Understanding the future 
favour. 
? Enabling inclusive growth through affordable, reliable and 
sustainable energy. 
? Effective use of technology
? Redesigning a minimum wage
  
                          SUMMARY DOCUMENT                                                 
           
Decline in the number of children by the working generation 
tes saving, as they must rely more on savings for retirement 
in comparison to previous generations.  
Composition effect on Savings: a large portion of saving tends to 
ages of 40 to 65 as people start to save for 
meaningful wages are crucial to increase savings.(in 
China, Wages affected saving rates) 
savings is driven primarily by demographics 
targets and virtuous cycle, survey has suggested new 
rinciples of ‘Behavioural economics’ in Policy making. 
Dwarfism in organised manufacturing. 
a public good. 
Judiciary. 
policy uncertainty to boost investment. 
Understanding the future population projection and turning it in our 
Enabling inclusive growth through affordable, reliable and 
technology in for welfare schemes. 
minimum wage system in India for inclusive growth. 
                                                          
    
 
 
3