ABSTRACT
Does there exist any specific factor the presence or the absence of which can demarcate India’s high growth phases from the slowdowns during the liberalization period? How to conceptualize India’s once-celebrated growth story in the midst of the present slowdown? With the backdrop of some stylized facts, this chapter attempts to address these questions by providing a demand-side theoretical framework that simultaneously explains the high growth phase as well as episodes of slowdown. The primary stimulus for investment and growth is argued to be exogenous changes in global demand, whereas higher global demand in itself is argued to open up the possibility of an increasing trade deficit. The growth story that would emerge out of such an accumulation process would be one of external dependence, where the domestic economy is exclusively dependent on favourable external economic conditions for keeping up demand and growth rate.
