Economic Trends in India Analysis

Questions and Answers

What significant event in 2008 contributed to the slowdown of India's export growth?

A significant increase in agricultural production

The Global Financial Crisis (correct)

A major global trade agreement

A surge in global demand

What was the peak percentage of GDP that India’s investment reached within four years during the early 2000s?

28%

18%

48%

38% (correct)

How did global commodity prices affect Indian agriculture post-GFC?

They had no impact on farm incomes.

They collapsed, undermining farm incomes. (correct)

They led to greater output growth.

They significantly increased farm incomes.

What was the growth rate of India's exports before the Global Financial Crisis compared to after?

More than 15% before, fell to 5% after Signup and view all the answers

What was the perception regarding India’s economy in the early 2000s?

It was expected to grow at 10 percent per annum. Signup and view all the answers

How did capital inflows change in India during the years leading to the Global Financial Crisis?

They exceeded 9 percent of GDP in 2007/08. Signup and view all the answers

Which country was mentioned as outperforming India in manufacturing exports post-GFC?

Bangladesh Signup and view all the answers

What trend occurred in real agricultural income growth from 2012-2018 compared to 2002-2011?

It fell by 1.3 percentage points. Signup and view all the answers

What was the approximate reduction in NPA ratios achieved by banks since 2014?

2 percentage points Signup and view all the answers

What is the estimated total amount of NPAs that remains unresolved?

Rs 9.2 lakh crores Signup and view all the answers

What percentage of bank assets represent NPAs in public sector banks?

12% Signup and view all the answers

How does the NPA ratio of banks in India compare with that of the United States during the GFC?

Higher by significant margin Signup and view all the answers

What has been the effect of writing off loans on the stock of outstanding credit?

It reduces the credit stock Signup and view all the answers

What has happened to public sector bank credit growth in recent years?

It has decelerated Signup and view all the answers

How much in debts are being negotiated as inter-creditor agreements, primarily in the power sector?

Rs 2.5 lakh crores Signup and view all the answers

What was the peak NPA ratio of bank assets recorded in 2017-18?

11.5% Signup and view all the answers

What is the central focus of the reform that should be prioritized in policy navigation?

Generating and disseminating accurate data Signup and view all the answers

According to the content, which aspect is essential for shaping private actions?

Consumer confidence Signup and view all the answers

What immediate task is suggested for the government in response to unreliable data?

Re-booting the data systems in key sectors Signup and view all the answers

Which policy question is NOT mentioned as confronting Indian policymakers?

Are current GDP measurements accurate? Signup and view all the answers

Who is suggested as a potential leader for the data committee to address measurement issues?

Professor Abhijit Banerjee Signup and view all the answers

Which concept illustrates the connection between confidence and behavior change mentioned in the content?

Bootstrap effect Signup and view all the answers

What is a potential consequence of unreliable data for policymakers?

Inability to formulate policy responses Signup and view all the answers

Which of the following best summarizes the main argument regarding reliable data?

Accurate data is crucial for both private and public sector decision-making. Signup and view all the answers

What is one of the primary factors attributed to the recent slowdown in aggregate demand by cyclicalists?

Problems in agriculture Signup and view all the answers

What is the significance of the year 2011/12 in the context of the discussed economic trends?

It separates the pre- and post-GFC periods. Signup and view all the answers

According to the structuralist argument, why is it challenging to explain the recent economic deceleration?

The long-standing structure of the economy has not significantly changed. Signup and view all the answers

What is the income inequality hypothesis proposed by Roy regarding economic growth in India since 1991?

A small group of high earners has driven a consumption boom. Signup and view all the answers

What criticism does the structuralist argument face regarding the sudden economic deceleration?

It cannot explain the economy's previous boom in the mid-2000s. Signup and view all the answers

What factors have driven India's growth medium-term since 1991, according to the discussion?

Exports and investment Signup and view all the answers

What role has demonetization played in the slowdown of aggregate demand?

It has resulted in policy and political uncertainty. Signup and view all the answers

Which of the following statements best reflects the cyclical perspective on economic growth in India?

Short-term fluctuations in demand significantly influence economic growth. Signup and view all the answers

What is the total amount of debt admitted for the firms listed in the resolution status table?

348,231 crore rupees Signup and view all the answers

Which acquirer successfully resolved the highest amount of debt among the completed cases?

Arcelor Mittal Signup and view all the answers

What is indicated by the recovery rate for Jyoti Structures?

45% Signup and view all the answers

What is the current status of Bhushan Power and Steel according to the resolution table?

Contested in NCLAT Signup and view all the answers

What issue does the ongoing situation of stressed enterprises highlight?

Deterioration of firm value amidst unresolved debts Signup and view all the answers

How much of the resolved amount is attributed to Electrosteel's completed resolution?

5,320 crore rupees Signup and view all the answers

What is the main characteristic of the bankruptcy cases processed by the IBC noted in the context?

They have been primarily straightforward Signup and view all the answers

Which firm had the lowest recovery rate among the completed cases?

Alok Industries Signup and view all the answers

What is the implication of having a large portion of stressed assets in independent power producers regarding their resolution?

Their cases are more complex and slower to resolve Signup and view all the answers

What has been the average recovery rate of the completed cases according to the information provided?

54% Signup and view all the answers

Study Notes

Economic Slowdown and Theories

Cyclicalists attribute India's economic slowdown to recent developments, particularly a slump in aggregate demand influenced by agriculture, demonetization, GST, and monetary tightness.
Long-standing economic structures and labor laws are criticized for their inability to explain sudden declines or previous growth spurts in the economy.
Income inequality hypothesis suggests that the consumption boom since 1991 has ended due to saturation among top earners, but evidence points to exports and investments as primary growth drivers.

Historical Context of Economic Growth

Early 2000s saw India's economy rebound after a recession; concurrent global economic upswing led to increased confidence in India's growth potential.
Export growth peaked, with significant increases in infrastructure investment, climbing to 38% of GDP within four years.
The post-Global Financial Crisis (2008) period saw growth collapse: exports decreased from over 15% to 5%, and agricultural incomes fell by 1.3 percentage points between 2012-2018 compared to earlier periods.

Non-Performing Assets (NPAs) Crisis

Public sector banks face an NPA ratio of 12%, the highest among major economies, indicating a significant banking crisis.
Total NPAs amount to ₹9.2 lakh crores; actual values may be higher due to negotiations on stressed assets.
Recovery through the Insolvency and Bankruptcy Code (IBC) has been slow, with minimal resolution of complex cases contributing to the overall issue.

Need for Reliable Data

Accurate data generation and dissemination are crucial for informed policy-making and maintaining economic confidence.
Policymakers face uncertainties about the economy's condition, employment issues, government revenues, and financial system stability due to unreliable data.
Recommended creation of a committee to address real sector measurement issues, potentially led by Professor Abhijit Banerjee.

Key Figures and Statistics

Between 2002-2011 and 2012-2018, significant shifts occurred in economic performance indicators.
Nonfood credit doubled within three years post-2008, yet subsequent economic struggles persist alongside a high NPA rate.
The need for enhanced data systems in real, fiscal, and financial sectors is essential for effective governance.

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Description

This quiz explores the recent developments in India's economy, focusing on the cyclicalists' viewpoints regarding the slowdown due to factors such as agricultural issues and policy changes. Topics include the impact of demonetization, GST, and export performance on economic growth. Test your understanding of these complex economic dynamics.