Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.

According to the Economic Survey 2018-2019, Indian economy has witnessed a gradual transition from a period of high and variable inflation to a more stable and low level of inflation along with steady GDP growth in the past five years.

Steady growth rate and low inflation been good for the Indian economy:

1. Low inflation has helped to promote stability, confidence, security and therefore encourages investment.

2. Steady growth also provided for better revenue prospects which assisted the government to increase the

contribution in various social sector schemes for example 17 percent hike in allocation to Women and Child Development Ministry.

3. Low inflation allowed the RBI to reduce the repo rates which provided capital for industrialists at cheaper rates.

4. Low inflation increases disposable income and therefore increases demand and investment in the economy. High inflation eats up the earnings of people which decreases demand in the economy.

5. Steady growth rate made it possible for the government to introduce reforms such as GST and Steady growth also provided for better revenue prospects which assisted the government to spend on welfare.

But steady GDP growth and low inflation are not sufficient as steady growth rate did not translate into employment opportunities and the unemployment rates stood at a 45 year high (7.1% in 2019 first quarter as per CMIE).

So, Inflation is a double-edged sword therefore a sustainable range of the inflation rate of 4-6% should be maintained so that maximum income generation could happen in the economy.