Writing for Mint, Niranjan Rajadhyaksha discusses the relevance of the insights from Sukhamoy Chakravarty’s paper titled "The Question Of Home Market And The Prospects of Indian Growth” in the context of India’s current economic scenario. Excerpts below:
"Forty years ago, Chakravarty wrote a paper titled On The Question Of Home Market And The Prospects of Indian Growth. Several of its insights connect to the current debates on the Indian economic slowdown, and especially whether the loss of momentum is because of supply rigidities or aggregate demand weakness.
Chakravarty asked in his 1979 paper why Indian industrial growth had stalled even after many of the major supply side constraints had eased. His core argument was that despite easing supply constraints, demand for industrial growth was being held back by a narrowing home market. Three of his specific points are especially relevant to the contemporary debate.
There is a parallel debate raging in India right now. The home market question may get a new resonance in our era of growing protectionism, though the Indian economy is now structurally very different."
Read the full article here.