{"id":28037,"date":"2015-04-06T02:34:41","date_gmt":"2015-04-06T02:34:41","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=28037"},"modified":"2024-04-03T13:16:10","modified_gmt":"2024-04-03T07:46:10","slug":"how-close-is-india-to-balanced-growth","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/how-close-is-india-to-balanced-growth\/","title":{"rendered":"How close is India to \u2018Balanced Growth\u2019?"},"content":{"rendered":"<p style=\"text-align: center\"><a ref=\"magnificPopup\" href=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/04\/How-close-is-India-to-\u2018Balanced-Growth\u2019.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-28112\" alt=\"How close is India to \u2018Balanced Growth\u2019\" src=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/04\/How-close-is-India-to-\u2018Balanced-Growth\u2019-300x160.jpg\" width=\"300\" height=\"160\" srcset=\"https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/04\/How-close-is-India-to-\u2018Balanced-Growth\u2019-300x160.jpg 300w, https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/04\/How-close-is-India-to-\u2018Balanced-Growth\u2019.jpg 307w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>A nation growing at a constant rate which is sustainable in the long run is said to have a balanced growth. Balanced growth path involves growth in all the sectors of the economy, be it exports or investments, in a balanced way (proportionally). The nation must define the optimal capital stock for which it faces such a growth rate. It takes into account factors like investment and saving rate, depreciation, population growth, inflation and technological advancement.<\/p>\n<p>How close is India to such a growth? What can be said about its current growth rate and the one expected for the future years? How do the factors mentioned above affect the balanced growth path? India\u2019s growth rate in 2012, 2013 and 2014 was 4.7%, 5% and 5.6% respectively. Economists expect the growth rate to be 6.4% in 2015. The inflation (GDP deflator) rate in 2012 and 2013 was 7.2% and 6.9% while the population growth rate in the same years was 1.3% and 1.2% respectively. The foreign direct investment (out of GDP) rate in 2012 and 2013 was 1.3% and 1.5% respectively. Knowing the fact that investment rate has a direct relationship with the growth rate while population growth rate and inflation rate have an inverse relationship, it is evident that the difference between the two has declined in 2012-13, which is signaling that the gap between the current growth rate and balanced growth rate is reducing. This also means that the economy is heading towards the optimal capital stock required to achieve the path, given the saving rate. (Note: According to the simplest version, change in capital stock is equal to the difference in investment and depreciation\/inflation\/population growth.) But since technological progress is difficult to measure and also considering that few relevant factors have been ignored, one must not jump on conclusions.<\/p>\n<p>What is believed is that since factors (specially saving rate) are under constant variations, the parameters used to estimate the balanced growth rate also alter continually. This would imply that the sustainable growth rate must be revised regularly so as to keep track on the economy\u2019s actual (real) position and then act accordingly.<\/p>\n<p>(All the data (numbers) are according to the \u2018old estimates\u2019 of the World Bank records.)<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/accounting-banking-and-finance\">Click here for government certification in Accounting, Banking &amp; Finance<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A nation growing at a constant rate which is sustainable in the long run is said to have a balanced growth. Balanced growth path involves growth in all the sectors of the economy, be it exports or investments, in a balanced way (proportionally). The nation must define the optimal capital stock for which it faces&#8230;<\/p>\n","protected":false},"author":1047,"featured_media":28112,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[3017,3019,3018,1052],"class_list":["post-28037","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-balanced-growth","tag-capital-stck","tag-current-growth","tag-indian-statistics"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How close is India to \u2018Balanced Growth\u2019? - Vskills Blog<\/title>\n<meta name=\"description\" content=\"How close is India to \u2018Balanced Growth\u2019? For an economy to flourish, it is vital to have an optimal capital stock. 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