ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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A Model of Growth of the Contemporary Indian Economy

Why has a rising share of economic surplus in output not created any serious realisation problem, and hence any consequent tendency towards stagnation in the Indian economy? Clearly, this is not because of exogenous countervailing factors, state expenditure and/or an export surplus of goods and services. The rising share of economic surplus in output has been accompanied by greater consumption by the surplus earners themselves and also by greater investment that has been stimulated by such consumption. The ability to introduce technological-cum-structural change through imitation of what prevails in the metropolis is what has kept up the level of aggregate demand in the Indian economy leading to an increase in the rate of economic growth. This article provides a simple model of this growth process and draws certain conclusions regarding its sustainability.

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