ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Macroeconomic Policy for an India in Transition

Two types of macroeconomic policies, categorised as Type I and Type II, are developed. A comparison shows why Type II would lead to better growth and infl ation outcomes in the Indian context. Analytical frameworks, data, and fundamentals, all of which are found to support Type II policy, are discussed, showing that India’s recent macroeconomic policy has tended towards that of Type I. This implies that growth and employment creation fall below potential even as the potential itself falls. Ironically, the primary infl ation expectations anchoring the function of infl ation targeting are underutilised.

Change is faster than our perception or understanding of it. Discussion and debate on India in transition is therefore required to demonstrate the contribution of ideas to development.

Extremes themselves lend to ideology. Moreover, established theories are easier to understand compared to nuanced “middles,” so the intellectual ball seems to toss only between old verities of underperformance and modes of analysis more suitable to developed economies. Studying underdevelopment perhaps may lead one to lose the ability to see development. It would be incorrect to apply advanced economy (AE) equilibrium concepts to an economy in transition.

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users

Updated On : 27th Nov, 2017

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top