Research Seminar by Prof. Pulapre Balakrishnan, Professor, Ashoka University and Senior Fellow, IIM Kozhikode was held on 29th June 2020 at IIM Kozhikode
Seminar Topic – Understanding the growth process in India
In the article ‘The internal dynamic of Indian economic growth” by Pulapre Balakrishnan, Mausumi Das, M.Parameswaran – ‘Journal of Asian Economics’ 2017 – we had addressed a stylized fact of the Indian economy since 1950 that the rate of growth of the economy has accelerated periodically. During this period there have been two distinct policy regimes in place. The mid-50s had witnessed the launch of what has been referred to as the Nehru-Mahalanobis Strategy which aimed at industrialisation within a regime characterised by investment licensing and restrictions on international trade and capital movements. This had lasted more or unchanged till 1991 when a substantial liberalisation of the policy regime took place. While there has certainly been an acceleration of growth since the liberalization of the policy regime in 1991 the growth rate of the economy had actually accelerated more than once before that date. This feature has been remarked upon as requiring explanation by the profession. My co-authors and I had resolved the puzzle as follows. Interpreting the accelerations observed as due to a dynamic internal of the growth process, we proposed an explanation in terms of a mechanism identified quite early in the development of the theoretical literature on growth which has been received renewed attention lately.
We then tested for the presence of this internal dynamic in the data via co-integration analysis and found that the internal dynamic we had postulated had set in India by the early 1960s. Our finding helps place in perspective the relative roles of policy, shocks, and internal dynamics in over half a century of growth in India.
In this presentation I shall explain the essentials of my article with Das and Parameswaran and extend it in an attempt to understand the growth performance of India up to the present.