In this Mint article, Vivek Dehejia, Resident Senior Fellow with IDFC Institute "explored in depth two popular explanations for this phenomenon. One explanation, known as secular stagnation, hypothesizes that it is deficient aggregate demand which explains the protracted stagnation in output and employment...

The second popular explanation points to the slowing down in the growth of productivity—roughly, the amount of output that a given quantum of inputs can produce—as the key driver for stagnating output and employment in the US and other advanced economies...

These two explanations may be described as being Occidental, in that they may apply to the US and other advanced economies, but do not make much sense when applied to emerging economies such as India...

Indeed, in India in particular, the embrace of flexible inflation targeting has been hailed as a major policy breakthrough in recent years, and this is about as conventional and neoclassical as monetary policy could be...

As it happens, there is a third explanation afoot that tries to explain stagnating growth in the US, and this particular one has much more resonance and relevance when applied to emerging economies such as India. It is has also aroused a great deal of controversy...

One thing is for certain: the debate about whether pro-business reforms are indeed pro-market and ultimately pro-growth, which lie at the heart of the Cochrane-DeLong dispute, are central to as yet unresolved policy debates in India, as we have seen. And, what is more, they speak directly to the likely efficacy in terms of a future growth kick of the pro-business stance of the Modi government as exemplified in its commitment to improve the doing business climate."

Read the full article here.