Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
4. What do you understand by middle-income trap? How can India avoid this trap to ensure equitable and continuous growth? (250 words)
Difficulty level: Moderate
Reference: Indian Express
Why the question:
A few years ago, a top economist from EAC-PM also flagged the issue when he pointed out that India’s growth was mostly driven by the demand generated by 100 million people at the top of the socio-economic ladder, and that demand had begun to reach a saturation point. He had warned that if the situation does not improve, India may fall into the middle-income trap.
Key Demand of the question:
To write about middle-income trap and ways to avoid it.
Structure of the answer:
Introduction:
Begin by defining middle income trap.
Body:
First, mention the various facets of middle-income trap and substantiate with facts and figures regarding it. Cite some examples of countries facing middle income trap.
Next, write about the various measures that can be taken to avoid the middle-income trap,
Conclusion:
Conclude with a way forward.
