May 10, 2019

Is India in the midst of a "middle income trap"?

"We are heading for a structural slowdown. This is an early warning. The economy since 1991 has been growing not on the basis of exports... but on the basis of what the top 100 million of the Indian population wants to consume," he said.

Those 100 million or 10 crore Indian consumers who were "powering" India's growth story, he said, have started to plateau out.

"It means in short we will not be South Korea. We will not be China. We will be Brazil. We will be South Africa. We will be a middle-income country with large numbers of people in poverty seeing rising crimes. In the history of the world. Countries have avoided the middle income trap but no country once in it, has been able to get out of this," he said.

This phenomenon is known by economists as a middle-income trap.


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