IBPS Clerk Mains English.pdf

The Indian economy is currently experiencing a phase of relatively slow growth, but it has the potential to grow at 9-10% in a sustained way. The potential growth rate is measured using trends with some filters, and the maximum growth rate achieved in the recent past can be taken as the lowest estimate of the potential. India achieved a growth rate of 9.5% in 2005-06, followed by 9.6% and 9.3% in the subsequent two years. The growth rate was robust, with a domestic savings rate of 34.9% of GDP, gross capital formation rate of 36.2%, and a current account deficit of 1.2% of GDP. However, the growth rate slowed down after 2011-12 due to external and domestic factors, including a deteriorated external environment, supply bottlenecks, and non-economic factors that led to a weakening of investment. To achieve high growth, the investment rate must be supported by a rise in the domestic saving rate, and the current account deficit must be sustainable. The incremental capital output ratio depends on technology, the skill of the labor force, and the quality of the education system, as well as the ease of doing business, which refers to the removal of bureaucratic hurdles that impede speedy execution of projects.