Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
2. The present economic slowdown is a consequence of both cyclical and structural factors. Comment. (250 words)
Why this question:
India is now in the midst of a significant economic slowdown, the International Monetary Fund has said, urging the government to take urgent policy actions to address the current prolonged downturn.
Key demand of the question:
Explain the recent trends being witnessed in the economy and provide for an analysis as to in what way it is the result of both cyclical and structural factors.
Comment– here we have to express our knowledge and understanding of the issue and form an overall opinion thereupon.
Structure of the answer:
Briefly discuss what a cyclic slowdown is; A cyclical slowdown is a period of weak economic growth that occurs at regular intervals. A structural slowdown is a more deep-rooted phenomenon signifying weak economic growth for over a long time.
Discuss first the structural factors responsible for these issues ranging from investment, Failure of the Insolvency and Bankruptcy Code (IBC), Unemployment etc.
Discuss then the cyclical factors – consumption, savings factor etc.
Explain the recent steps taken by the govt. and the RBI.
Suggest way forward.
Conclude by suggesting solutions and suggestions as to what can be done to address these issues.