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What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?
- a)Excessive foreign investment
- b)Increasing rural poverty
- c)High inflation rates
- d)Low investment and job creation
Correct answer is option 'D'. Can you explain this answer?
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What major challenge is contributing to India's economic growth being ...
The "6% GDP growth trap" in India is largely attributed to low investment and job creation, where the investment-to-GDP ratio has significantly declined in recent years. This stagnation prevents the economy from achieving higher growth rates necessary for substantial poverty alleviation and middle-class expansion. Additionally, the fiscal constraints faced by the government limit its ability to invest in growth-promoting sectors. A noteworthy point is that a sustained growth rate of over 8% is crucial for lifting a larger segment of the population into the middle class.
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What major challenge is contributing to India's economic growth being ...
Understanding the "6% GDP Growth Trap"
India's economy, despite showing a steady growth rate of around 6%, faces significant challenges that hinder it from accelerating further. This phenomenon has been termed the "6% GDP growth trap," primarily attributed to low investment and job creation.
Key Factors Contributing to the Trap
Consequences of the Trap
In conclusion, addressing low investment and job creation is critical for India to escape the "6% GDP growth trap" and unlock its full economic potential.
India's economy, despite showing a steady growth rate of around 6%, faces significant challenges that hinder it from accelerating further. This phenomenon has been termed the "6% GDP growth trap," primarily attributed to low investment and job creation.
Key Factors Contributing to the Trap
- Low Investment Levels:
- Investment is crucial for economic expansion. Insufficient capital inflow in key sectors restricts growth potential, limiting infrastructure development and technological upgrades. - Poor Job Creation:
- A stagnant job market leads to high unemployment rates, particularly among the youth. With millions entering the workforce annually, the lack of job opportunities curtails consumer spending, which is vital for economic growth. - Inadequate Private Sector Participation:
- The private sector plays a pivotal role in driving growth. Low confidence among investors due to regulatory hurdles and economic uncertainty has resulted in underwhelming private investment. - Structural Issues:
- The economy grapples with structural inefficiencies, such as bureaucratic delays and corruption, which deter both domestic and foreign investments.
Consequences of the Trap
- Stagnant Growth:
- The inability to break free from this trap results in a lack of acceleration in GDP growth, keeping India from reaching its true economic potential. - Increased Inequality:
- Limited job creation exacerbates income inequality, leading to social unrest and further economic challenges.
In conclusion, addressing low investment and job creation is critical for India to escape the "6% GDP growth trap" and unlock its full economic potential.
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What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer?.
What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What major challenge is contributing to India's economic growth being described as a "6% GDP growth trap"?a) Excessive foreign investmentb) Increasing rural povertyc) High inflation ratesd) Low investment and job creationCorrect answer is option 'D'. Can you explain this answer?.
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