Bank Exams Exam > Bank Exams Videos > Indian Economy for Government Exams (Hindi) > What are the challenges to achieve double digit GDP growth? - Can India grow? - Current Affairs 2018
What are the challenges to achieve double digit GDP growth? - Can India grow? - Current Affairs 2018 Video Lecture | Indian Economy for Government Exams (Hindi) - Bank Exams
FAQs on What are the challenges to achieve double digit GDP growth? - Can India grow? - Current Affairs 2018 Video Lecture - Indian Economy for Government Exams (Hindi) - Bank Exams
| 1. What are the challenges to achieve double digit GDP growth? |  |
Ans. Achieving double-digit GDP growth can be challenging due to several factors. Some of the key challenges include:
1. Infrastructure development: Inadequate infrastructure, including transportation, energy, and communication networks, can hinder economic growth. Developing and maintaining a robust infrastructure requires significant investments and effective implementation.
2. Skill development and education: A skilled workforce is crucial for sustaining economic growth. Improving the quality of education and providing vocational training programs can help address the skill gap and enhance productivity.
3. Regulatory reforms: Cumbersome regulations and bureaucratic red tape can impede business growth and discourage investments. Streamlining regulations, easing compliance procedures, and promoting a business-friendly environment are important for fostering economic expansion.
4. Income inequality: High income inequality can hinder inclusive growth and create social unrest. It is essential to address disparities in income distribution through targeted policies, such as social welfare programs and progressive taxation.
5. Global economic conditions: External factors, such as global economic downturns and trade tensions, can impact a country's growth trajectory. Maintaining stable global trade relationships and diversifying export markets can mitigate the risks associated with external economic conditions.
| 2. Can India grow? | |
Ans. Yes, India has the potential for high economic growth. The country has experienced significant economic progress in recent years and has emerged as one of the world's fastest-growing major economies. Several factors contribute to India's growth potential:
1. Demographic advantage: India has a young and growing population, which can act as a demographic dividend. With proper education and skill development, this large workforce can contribute significantly to economic growth.
2. Market size: India's vast consumer market offers immense opportunities for businesses and investments. Rising income levels and a growing middle class drive domestic consumption, which can fuel economic expansion.
3. Innovation and technology: India has a thriving startup ecosystem and is becoming a hub for innovation and technology. Advancements in sectors like information technology, biotechnology, and renewable energy can drive economic growth and job creation.
4. Government initiatives: The Indian government has undertaken various reforms and initiatives to boost economic growth, such as the Make in India campaign, Digital India, and Goods and Services Tax (GST). These measures aim to improve ease of doing business, attract investments, and promote entrepreneurship.
5. Infrastructure development: The government has prioritized infrastructure development, including projects like the construction of highways, railways, and smart cities. Improved infrastructure can enhance connectivity, reduce logistics costs, and attract investments.
| 3. What are the key factors hindering double-digit GDP growth in India? | |
Ans. Several factors hinder double-digit GDP growth in India:
1. Slow reforms: Despite some progress, India still faces challenges in implementing necessary reforms effectively. Issues like bureaucratic red tape, complex regulations, and inefficient legal systems hinder business growth and impact economic expansion.
2. Poor infrastructure: India's infrastructure, including roads, ports, and power supply, lags behind the requirements of a rapidly growing economy. Inadequate infrastructure limits industrial development, inhibits productivity, and increases logistics costs.
3. Skill gap: India's education system often fails to equip students with the necessary skills demanded by the job market. The lack of skilled labor affects productivity and hampers economic growth.
4. Informal sector dominance: A significant portion of India's economy operates in the informal sector, which lacks formal regulations and contributes less to GDP growth. Formalizing and integrating the informal sector into the mainstream economy is crucial for achieving higher growth rates.
5. Income inequality: Income inequality remains a significant challenge in India. The concentration of wealth in a few hands limits the purchasing power of the majority and hampers overall economic growth.
| 4. How can India overcome the challenges and achieve double-digit GDP growth? | |
Ans. To overcome the challenges and achieve double-digit GDP growth, India can consider the following measures:
1. Focused investment in infrastructure: Increasing public and private investment in infrastructure development is essential. This includes upgrading transportation networks, power generation, and digital connectivity to facilitate economic activities and attract investments.
2. Promoting entrepreneurship: Encouraging entrepreneurship and creating a supportive ecosystem for startups can drive innovation, job creation, and economic growth. Providing access to finance, simplifying regulations, and fostering mentorship programs can support entrepreneurship.
3. Enhancing skill development: Strengthening vocational training programs and aligning educational curricula with industry requirements can bridge the skill gap. This will enhance employability, productivity, and overall economic growth.
4. Streamlining regulations: Simplifying regulations and reducing bureaucratic hurdles can attract investments and improve the ease of doing business. The government should focus on creating a transparent, predictable, and investor-friendly regulatory environment.
5. Inclusive growth policies: Implementing policies that address income inequality, improve social welfare, and promote equitable distribution of resources can foster inclusive growth. This can be achieved through targeted social welfare programs, progressive taxation, and measures to empower marginalized communities.
| 5. How can global economic conditions impact India's growth prospects? | |
Ans. Global economic conditions can impact India's growth prospects in several ways:
1. Trade and export dependency: India's economy is highly dependent on international trade. A global economic downturn or trade tensions can negatively affect export demand and hinder economic growth.
2. Foreign direct investment (FDI): Global economic conditions influence the flow of FDI into India. During times of economic uncertainty, investors may be hesitant to invest in emerging markets like India, leading to reduced investment inflows and slower growth.
3. Commodity prices: India is a major importer of commodities like oil and metals. Fluctuations in global commodity prices can impact India's import bill, current account balance, and overall economic stability.
4. Remittances: India is the world's largest recipient of remittances from its diaspora. Economic downturns in countries with a significant Indian population can reduce remittance inflows, affecting domestic consumption and economic growth.
5. Capital outflows: Global economic uncertainties can trigger capital outflows from emerging markets, including India. This can result in currency depreciation, reduced foreign exchange reserves, and increased borrowing costs, negatively impacting growth prospects.
Text Transcript from Video
[Music]
[Applause]
hello and welcome to study a cube in
this lecture we will discuss about the
challenges for double-digit growth in
India why this has become an important
current affair the Union government is
targeting for a double-digit economic
growth that is GDP growth so
double-digit GDP growth is a target of
the Union government and this is in real
terms and attaining a double-digit GDP
growth is challenging for India in this
lecture we will discuss what are the
major challenges and also how to
overcome this challenges but before we
move on let us first of all see what
does GDP and also let us see what is
real GDP and also nominal GDP GDP is the
monetary value or the money value of all
goods and services produced in an
economy in a financial year so the first
point you should remember is it is the
monetary value or money value of what
all the final goods and services which
means that intermediate goods and
services are not included in GDP so this
is final goods and services produced in
a domestic territory which means
produced within an economy and that -
within a financial year so this is GDP
the monetary value of all the final
goods and services produced within an
economy during a financial year when we
say the final goods and services here
the intermediate goods and services are
not counted why because this is to avoid
the problem of double counting because
intermediate goods they again is used in
the production process for example if we
consider milk suppose the milk is
brought by a household and he uses this
milk in order to make tea in his house
and he consumes it or his family
consumes it so make for this household
it is a final good because they are
consuming it but if this milk is
purchased by a tea stall owner what
happens is that he will use this make in
order to
and then he will sell the tea so for him
it is a intermediate good so what
happens is in GDP calculation the value
of T is added so the value of T will
include the value of milk as well but if
instead we were adding the value of milk
also what will happen the value of milk
will be double counted so in order to
avoid this problem of double counting
the intermediate goods are exempted from
the calculation of GDP and next is
domestic third tree when we say domestic
territory it means within an economy so
the domestic territory of an economy
includes the political boundaries along
with the political boundaries embassies
are included along with that military
establishments that are located abroad
also the ships aircrafts fishing
missiles oil rigs eggs etre owned by the
residents of a country so all these are
included in order to arrive at the
domestic territory
so whatever production is done inside
the domestic territory only those things
are added in the GDP if we take an
example such in Tendulkar is an Indian
if he owns a restaurant in Dubai and
that restaurant earns some profit or
some production takes place it is a
service so the output of the services
from the restaurant or the profit of the
restaurant will not be added in GDP
because it is not produced in our
economy so that is the basic difference
and next one is financial year financial
year in India begins on April 1st and
ends on 31st March and again this
financial year is divided into four
quarters
the first quarters from 1st April to
30th June the second quarter is from 1st
July to 30th September third quarter or
the q3 is from October 1st to December
31st and there is quarter for q4 from
January 1st to 31st March if we look at
the if we see some notifications or
of the RBA we will see these are
published in various quarters these
reports are with regard to some quarters
so keep in mind there are four quarters
in a financial ear now coming to GDP at
current prices and constant prices first
of all coming to current prices under
GDP at current prices the goods and
services are valued at the same year's
prices or the actual transactions would
take place at the current price so this
is same year prices and coming to the
GDP at constant prices under GDP at
constant prices the goods and services
are valued at base year prices and this
is done in order to estimate the
economic growth so coming to the base
here what is the criteria for selection
of a base year the base year is selected
ramaa normally the base year should be a
normal year normal year means without
much fluctuations in the inflation rate
so inflation will be normal in a normal
year and also relevant data should be
available for that particular year then
the year is considered to be a base year
this is the criteria for selecting a
base year so what is the major
difference is that at GDP at current
prices the same year prices are
considered and this can be inflated
prices so inflation is considered or the
rates are affected by inflation at GDP
at current prices but when it comes to
GDP at constant prices inflation is
normal because the base year has been
selected from manire where in which the
inflation rates are normal to understand
GDP current prices and GDP at constant R
Isis in a better manner let us consider
an example let us take three financial
year 2011-12 2012-13 2013-14 so these
are three financial years now let us
take the production or the output
consider the production was 100 units in
2011-12 again 100 units in 2012-13 and
coming to 1314 it is
150 units and now let us take the
current air prices the current air
prices for 2011-12 is 10 for 2012-13 is
15 and for 2013-14 is again 15 now
coming to the base year prices the base
year price will be a fixed price that is
10 10 and 10 for the 3 years now coming
to the calculation of GDP there are two
types of GDP that is constant price that
is the real GDP and current price that
is the nominal GDP so at current price
we get nominal GDP and at constant price
we get the real GDP now how to calculate
the GDP production in do constant that
this base year price will give you
constant GDP or real GDP production 100
into base year is thousand so real GDP
is thousand coming to current or nominal
GDP production into current that is
again thousand secondly 2012/13
production into current is nominal GDP
that will be thousand five hundred
production into base year will be real
GDP that is again thousand coming to
2013-14 production 150 into current will
give you nominal GDP that is 2250 again
production into base year will give you
real GDP now coming back to the example
in 2012 13 we will see that the
production is one hundred units and the
current price is 15 and base year prices
10 so multiplying the production with
base year prices we will get constant or
real GDP it is thousand units but when
it comes to current or nominal GDP this
is thousand five hundred what is the
reason because the current prices are
high or it is fifteen rupees but see
here the production is the same which
means that there is no improvement in
the output output remains the same but
the GDP has increased what is the reason
for
that it is due to inflation inflation
means a persistent rise in the prices of
commodities in the market and here we
will see that the current prices has
increased and that is the reason there
is an increase in nominal GDP but when
it comes to real GDP the GDP is lesser
than the nominal GDP because the base
year prices are considered inflation is
not calculated now again coming to 2013
14 the production has increased to 150
units so therefore the constant or the
real GDP has also increased so when
production increases the real GDP
increases so basically the difference
between real GDP and nominal GDP is that
the nominal GDP can increase due to two
things
one is due to increase in production
here in this example 2013-14 we will see
that the nominal GDP has increased
because one reason is increase in prices
second reason is increase in production
so an increase in production will lead
to an increase in nominal GDP also an
increase in the rate of inflation or
when the prices increases this will
again increase the nominal GDP so two
factors can increase the nominal GDP
output and inflation but when it comes
to real GDP it can increase only if the
production increases from 2013-14
example we will understand that so real
GDP can increase only if there is an
increase in production so with an
increase in inflation the real GDP will
not increase hope this concept is very
clear for you this is a very necessary
understanding you must have you should
clearly be able to differentiate between
real GDP and nominal GDP and when it
comes to our topic datas see the
government is targeting for a
double-digit GDP growth in real terms
which means that the government is
trying to achieve
double-digit GDP growth in real GDP
which means that the production should
necessarily increase with an increase in
the price or with an increase in
inflation the normal
GDP may increase but the target of
government is to increase the real GDP
which means inflation should not be the
reason for the increase in GDP but it
should be an increase in production
so definitely production must be the
engine or increasing production must be
the engine that drives our economy to a
double-digit growth in terms of real GDP
now let us see what are the challenges
that we are facing in order to achieve
this double-digit growth first of all
the high base that we have
which means our economy is very big in
terms of size we have a very large
economy therefore that base is very high
so growth should happen in a broad-based
manner so because of this high base it
is very difficult to attain this growth
level secondly the reason is inflation
particularly food and fuel inflation
these two are highly volatile in nature
coming to the food inflation agriculture
will grow the stagnant and majority of
our population is highly dependent on
agriculture and if only this sector
improves of or if there is a improvement
in the agricultural sector only then
there will be growth in the majority of
the economy and also because of
increased prices of food commodities or
food inflation the spending increases
when there is inflation in the economy
the prices will increase and therefore
the spending also increases and food is
an essential commodity and when the
spending on food increases it affects
the saving patterns savings will reduce
again with a decrease in savings the
interest rates will increase and with
high interest rates the investment in
the economy will come down and this will
affect the growth and development of the
economy again coming to fuel inflation
we are highly dependent on inputs for
our fuel requirements and when the
prices of fuel are high what really
happens is that it impacts most of the
sectors of the economy so the cost of
production in most of the sectors will
increase this will
raise the prices of commodities in the
market leading to cost-push inflation in
the economy under cost-push inflation
two things happen
taking price on the y axis and quantity
on the x axis the demand curve dd and
the supply curve assists so this is the
equilibrium point and during cost-push
inflation the prices will increase and
also the quantity will come down so it
is double impact oneness increase in
prices second the quantity or output of
an economy will come down so this will
affect the double-digit growth or growth
of an economy and third is stability if
we have to attain a double-digit growth
what is necessary at least three four
years there should be a stable growth
and this stable growth must be at high
rates also in all the sectors
agriculture industry services etc so
high growth rate which is also stable in
all sectors is necessary for a
double-digit growth and this is quite
challenging for an economy like India
next challenges and increase in the
non-performing assets or the NPA NPM in
non-performing assets if a loan alone
becomes a non performing asset if the
principal or the interest is view for 90
days or above so an increase in non
performing asset means that the banks
are not able to provide further loans
because of accumulation of bad loans so
this will reduce the capital in the
economy so the reduction in capital will
lead to reduction in investment and when
the investment in an economy reduces
this will effect the growth the growth
also will come down so these are the
major challenges our economy is facing
in order to attain a double-digit growth
now what can be done in order to
overcome this challenges first of all
agriculture needs to be boosted because
first reason agriculture and all other
sectors are interconnected and it also
provides raw materials for service
sector for industry manufacturing for
all sectors agriculture is an important
factor
so agricultural sector and all other
sectors have interconnected and for that
reason if agriculture is boosted all
other sectors will be impacted secondly
agriculture contributes 15 percentage of
share in GDP but the proportion of
population that is dependent on
agriculture is more than 50 percentage
so considering the proportion or
percentage of population who is
dependent on agriculture
if the GDP contribution gets increased
these people also will be impacted or
they will also grow so the per capita
income will increase and with an
increase in per capita income savings
will happen savings will increase the
capital formation or investment in an
economy and it will lead to growth in
the economy thirdly most of the
agriculture lists are from rural India
so if the agricultural sector is boosted
it means that rural India will develop
the rural spending will increase split
an increase in rural spending the
standard of living of rural areas will
increase and this will lead to
development fourth one is productivity
and food inflation in India agriculture
is highly dependent on monsoon also we
do not have enough technological
advancement when it comes to agriculture
so if all this areas get some
improvement the productivity will
increase the farmers income will
increase also there will be sufficient
commodities available in the market if
the productivity increases this will
reduce the food inflation and if the
rate of inflation or food inflation
comes down this will increase the rate
of growth in the economy or the GDP
growth rate will increase second
Darkness building up industry the
industrial sector needs to be given more
concentration manufacturing and
construction sectors they have the
potential for growth or they can take
the economy forwards so these two
sectors have high potential for growth
again coming to the bond markets so bond
markets also needs to grow why because
funding is very necessary for growth and
the bond markets
provide funding which can help in the
growth process of the economy so
reviving the bond markets is also
necessary and coming to the end pay
issue that is non-performing assets this
also needs to be resolved so if NP
issues are resolved this will reduce the
bad debts or bad loans in the banks and
if the rate of bad debts come down this
will increase the capital that is
available so with increased capital this
will increase the investment and
investment will increase the growth in
the economy another important thing is
affordable housing and if an emphasis is
given on affordable housing it can
accelerate growth how is this possible
because affordable housing or housing
sector is linked to many other
industries like the steel cement
machinery metals etc and if affordable
housing is given emphasis the housing
sector will improve and this will
automatically improve the industries
like steel cement machinery metals
exeter so this also needs to be given
emphasis you can find the PDF of this
lecture on my Facebook page you can find
all the previous economic survey
lectures and other Current Affair
lectures on my Facebook page
[Music]
[Applause]
[Music]
[Applause]
hello and welcome to study a cube in
this lecture we will discuss about the
challenges for double-digit growth in
India why this has become an important
current affair the Union government is
targeting for a double-digit economic
growth that is GDP growth so
double-digit GDP growth is a target of
the Union government and this is in real
terms and attaining a double-digit GDP
growth is challenging for India in this
lecture we will discuss what are the
major challenges and also how to
overcome this challenges but before we
move on let us first of all see what
does GDP and also let us see what is
real GDP and also nominal GDP GDP is the
monetary value or the money value of all
goods and services produced in an
economy in a financial year so the first
point you should remember is it is the
monetary value or money value of what
all the final goods and services which
means that intermediate goods and
services are not included in GDP so this
is final goods and services produced in
a domestic territory which means
produced within an economy and that -
within a financial year so this is GDP
the monetary value of all the final
goods and services produced within an
economy during a financial year when we
say the final goods and services here
the intermediate goods and services are
not counted why because this is to avoid
the problem of double counting because
intermediate goods they again is used in
the production process for example if we
consider milk suppose the milk is
brought by a household and he uses this
milk in order to make tea in his house
and he consumes it or his family
consumes it so make for this household
it is a final good because they are
consuming it but if this milk is
purchased by a tea stall owner what
happens is that he will use this make in
order to
and then he will sell the tea so for him
it is a intermediate good so what
happens is in GDP calculation the value
of T is added so the value of T will
include the value of milk as well but if
instead we were adding the value of milk
also what will happen the value of milk
will be double counted so in order to
avoid this problem of double counting
the intermediate goods are exempted from
the calculation of GDP and next is
domestic third tree when we say domestic
territory it means within an economy so
the domestic territory of an economy
includes the political boundaries along
with the political boundaries embassies
are included along with that military
establishments that are located abroad
also the ships aircrafts fishing
missiles oil rigs eggs etre owned by the
residents of a country so all these are
included in order to arrive at the
domestic territory
so whatever production is done inside
the domestic territory only those things
are added in the GDP if we take an
example such in Tendulkar is an Indian
if he owns a restaurant in Dubai and
that restaurant earns some profit or
some production takes place it is a
service so the output of the services
from the restaurant or the profit of the
restaurant will not be added in GDP
because it is not produced in our
economy so that is the basic difference
and next one is financial year financial
year in India begins on April 1st and
ends on 31st March and again this
financial year is divided into four
quarters
the first quarters from 1st April to
30th June the second quarter is from 1st
July to 30th September third quarter or
the q3 is from October 1st to December
31st and there is quarter for q4 from
January 1st to 31st March if we look at
the if we see some notifications or
of the RBA we will see these are
published in various quarters these
reports are with regard to some quarters
so keep in mind there are four quarters
in a financial ear now coming to GDP at
current prices and constant prices first
of all coming to current prices under
GDP at current prices the goods and
services are valued at the same year's
prices or the actual transactions would
take place at the current price so this
is same year prices and coming to the
GDP at constant prices under GDP at
constant prices the goods and services
are valued at base year prices and this
is done in order to estimate the
economic growth so coming to the base
here what is the criteria for selection
of a base year the base year is selected
ramaa normally the base year should be a
normal year normal year means without
much fluctuations in the inflation rate
so inflation will be normal in a normal
year and also relevant data should be
available for that particular year then
the year is considered to be a base year
this is the criteria for selecting a
base year so what is the major
difference is that at GDP at current
prices the same year prices are
considered and this can be inflated
prices so inflation is considered or the
rates are affected by inflation at GDP
at current prices but when it comes to
GDP at constant prices inflation is
normal because the base year has been
selected from manire where in which the
inflation rates are normal to understand
GDP current prices and GDP at constant R
Isis in a better manner let us consider
an example let us take three financial
year 2011-12 2012-13 2013-14 so these
are three financial years now let us
take the production or the output
consider the production was 100 units in
2011-12 again 100 units in 2012-13 and
coming to 1314 it is
150 units and now let us take the
current air prices the current air
prices for 2011-12 is 10 for 2012-13 is
15 and for 2013-14 is again 15 now
coming to the base year prices the base
year price will be a fixed price that is
10 10 and 10 for the 3 years now coming
to the calculation of GDP there are two
types of GDP that is constant price that
is the real GDP and current price that
is the nominal GDP so at current price
we get nominal GDP and at constant price
we get the real GDP now how to calculate
the GDP production in do constant that
this base year price will give you
constant GDP or real GDP production 100
into base year is thousand so real GDP
is thousand coming to current or nominal
GDP production into current that is
again thousand secondly 2012/13
production into current is nominal GDP
that will be thousand five hundred
production into base year will be real
GDP that is again thousand coming to
2013-14 production 150 into current will
give you nominal GDP that is 2250 again
production into base year will give you
real GDP now coming back to the example
in 2012 13 we will see that the
production is one hundred units and the
current price is 15 and base year prices
10 so multiplying the production with
base year prices we will get constant or
real GDP it is thousand units but when
it comes to current or nominal GDP this
is thousand five hundred what is the
reason because the current prices are
high or it is fifteen rupees but see
here the production is the same which
means that there is no improvement in
the output output remains the same but
the GDP has increased what is the reason
for
that it is due to inflation inflation
means a persistent rise in the prices of
commodities in the market and here we
will see that the current prices has
increased and that is the reason there
is an increase in nominal GDP but when
it comes to real GDP the GDP is lesser
than the nominal GDP because the base
year prices are considered inflation is
not calculated now again coming to 2013
14 the production has increased to 150
units so therefore the constant or the
real GDP has also increased so when
production increases the real GDP
increases so basically the difference
between real GDP and nominal GDP is that
the nominal GDP can increase due to two
things
one is due to increase in production
here in this example 2013-14 we will see
that the nominal GDP has increased
because one reason is increase in prices
second reason is increase in production
so an increase in production will lead
to an increase in nominal GDP also an
increase in the rate of inflation or
when the prices increases this will
again increase the nominal GDP so two
factors can increase the nominal GDP
output and inflation but when it comes
to real GDP it can increase only if the
production increases from 2013-14
example we will understand that so real
GDP can increase only if there is an
increase in production so with an
increase in inflation the real GDP will
not increase hope this concept is very
clear for you this is a very necessary
understanding you must have you should
clearly be able to differentiate between
real GDP and nominal GDP and when it
comes to our topic datas see the
government is targeting for a
double-digit GDP growth in real terms
which means that the government is
trying to achieve
double-digit GDP growth in real GDP
which means that the production should
necessarily increase with an increase in
the price or with an increase in
inflation the normal
GDP may increase but the target of
government is to increase the real GDP
which means inflation should not be the
reason for the increase in GDP but it
should be an increase in production
so definitely production must be the
engine or increasing production must be
the engine that drives our economy to a
double-digit growth in terms of real GDP
now let us see what are the challenges
that we are facing in order to achieve
this double-digit growth first of all
the high base that we have
which means our economy is very big in
terms of size we have a very large
economy therefore that base is very high
so growth should happen in a broad-based
manner so because of this high base it
is very difficult to attain this growth
level secondly the reason is inflation
particularly food and fuel inflation
these two are highly volatile in nature
coming to the food inflation agriculture
will grow the stagnant and majority of
our population is highly dependent on
agriculture and if only this sector
improves of or if there is a improvement
in the agricultural sector only then
there will be growth in the majority of
the economy and also because of
increased prices of food commodities or
food inflation the spending increases
when there is inflation in the economy
the prices will increase and therefore
the spending also increases and food is
an essential commodity and when the
spending on food increases it affects
the saving patterns savings will reduce
again with a decrease in savings the
interest rates will increase and with
high interest rates the investment in
the economy will come down and this will
affect the growth and development of the
economy again coming to fuel inflation
we are highly dependent on inputs for
our fuel requirements and when the
prices of fuel are high what really
happens is that it impacts most of the
sectors of the economy so the cost of
production in most of the sectors will
increase this will
raise the prices of commodities in the
market leading to cost-push inflation in
the economy under cost-push inflation
two things happen
taking price on the y axis and quantity
on the x axis the demand curve dd and
the supply curve assists so this is the
equilibrium point and during cost-push
inflation the prices will increase and
also the quantity will come down so it
is double impact oneness increase in
prices second the quantity or output of
an economy will come down so this will
affect the double-digit growth or growth
of an economy and third is stability if
we have to attain a double-digit growth
what is necessary at least three four
years there should be a stable growth
and this stable growth must be at high
rates also in all the sectors
agriculture industry services etc so
high growth rate which is also stable in
all sectors is necessary for a
double-digit growth and this is quite
challenging for an economy like India
next challenges and increase in the
non-performing assets or the NPA NPM in
non-performing assets if a loan alone
becomes a non performing asset if the
principal or the interest is view for 90
days or above so an increase in non
performing asset means that the banks
are not able to provide further loans
because of accumulation of bad loans so
this will reduce the capital in the
economy so the reduction in capital will
lead to reduction in investment and when
the investment in an economy reduces
this will effect the growth the growth
also will come down so these are the
major challenges our economy is facing
in order to attain a double-digit growth
now what can be done in order to
overcome this challenges first of all
agriculture needs to be boosted because
first reason agriculture and all other
sectors are interconnected and it also
provides raw materials for service
sector for industry manufacturing for
all sectors agriculture is an important
factor
so agricultural sector and all other
sectors have interconnected and for that
reason if agriculture is boosted all
other sectors will be impacted secondly
agriculture contributes 15 percentage of
share in GDP but the proportion of
population that is dependent on
agriculture is more than 50 percentage
so considering the proportion or
percentage of population who is
dependent on agriculture
if the GDP contribution gets increased
these people also will be impacted or
they will also grow so the per capita
income will increase and with an
increase in per capita income savings
will happen savings will increase the
capital formation or investment in an
economy and it will lead to growth in
the economy thirdly most of the
agriculture lists are from rural India
so if the agricultural sector is boosted
it means that rural India will develop
the rural spending will increase split
an increase in rural spending the
standard of living of rural areas will
increase and this will lead to
development fourth one is productivity
and food inflation in India agriculture
is highly dependent on monsoon also we
do not have enough technological
advancement when it comes to agriculture
so if all this areas get some
improvement the productivity will
increase the farmers income will
increase also there will be sufficient
commodities available in the market if
the productivity increases this will
reduce the food inflation and if the
rate of inflation or food inflation
comes down this will increase the rate
of growth in the economy or the GDP
growth rate will increase second
Darkness building up industry the
industrial sector needs to be given more
concentration manufacturing and
construction sectors they have the
potential for growth or they can take
the economy forwards so these two
sectors have high potential for growth
again coming to the bond markets so bond
markets also needs to grow why because
funding is very necessary for growth and
the bond markets
provide funding which can help in the
growth process of the economy so
reviving the bond markets is also
necessary and coming to the end pay
issue that is non-performing assets this
also needs to be resolved so if NP
issues are resolved this will reduce the
bad debts or bad loans in the banks and
if the rate of bad debts come down this
will increase the capital that is
available so with increased capital this
will increase the investment and
investment will increase the growth in
the economy another important thing is
affordable housing and if an emphasis is
given on affordable housing it can
accelerate growth how is this possible
because affordable housing or housing
sector is linked to many other
industries like the steel cement
machinery metals etc and if affordable
housing is given emphasis the housing
sector will improve and this will
automatically improve the industries
like steel cement machinery metals
exeter so this also needs to be given
emphasis you can find the PDF of this
lecture on my Facebook page you can find
all the previous economic survey
lectures and other Current Affair
lectures on my Facebook page
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