Macroeconomic Overview of India

Since India gained independence from the British in 1947, they have made steady progress in economic growth and poverty reduction. There has been political unrest and tension with Pakistan. However, there have not been substantial shocks to the economy. The most recent crisis was in 1991, but was not a major crisis when compared to Asia or Mexico. GDP did not decline in 1991 or 1992. Despite the political tensions, India has shown substantial growth in the very long run. India is one of the fastest growing economies in the world. Output has increased incrementally, poverty rates have been reduced, and there has been ongoing improvement in measures of human capital. Substantial challenges, such as ameliorating the persistence of poverty and insuring growth continues, still exists. Currently, India’s GDP is around $3-$4 trillion, per capita GDP around $3000. The GDP in India is growing at a rate of 8%. 2 By looking at the Solow Growth Model and some other key macroeconomics theories, some improvement can be done to improve these figures.