The Post-2010 Growth Slowdown and a Debatable Partial Recovery

Abstract

The Indian economy slowed down after 2010. The sixth chapter provides data to argue that this can be considered to be a fourth growth episode for the country. Next, it analyses sectoral data to show that this slowdown has been particularly significant in rent-thick sectors that were characterized by closed deals and crony-capitalism in the third episode. Based on the theoretical framework described in Chapter 2, this chapter argues that this slowdown was due to negative feedback effects to closed deals that resulted in a disordered deal environment, and hence a fall in investment and growth rates. The new government has been partially successful in restoring an ordered deals environment and hence growth, but political and reputational issues have delayed changes necessary for rapid growth.