Rajiv Kumar* Mathew Joseph* Karan Singh*
India had a dream run of five years during 2003-08 as the GDP growth averaged nearly 9 per cent annually for five years, the best ever run over five years ever! The economy began to slow down from the middle of 2007-08. A 9 per cent growth apparently could not be sustained, being clearly beyond India’s potential rate of growth which has been estimated by more than one agency to be around 8.5 per cent. And as the economy overheated, the central bank tightened credit slowly initially but harder since 2006-07. As an expected outcome, the economy began to slow down. Some of us had argued that th tightening was going too far and over reacting to inflationary fears which were largely arose from global factors. The policy makers and none of us had foreseen the external shock arising from the global crisis which began with the financial meltdown in the US. The interesting question therefore is: what would India’s growth rate have been in response to the policy measures without the global crisis as compared to what it is likely to be in the context of the on going global crisis.