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How Economic Growth Benefits You? Research Team | Posted On Wednesday, September 11,2019, 08:10 PM

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How Economic Growth Benefits You?



Economic Growth in India:

India is among the major economies in the world and can be considered as one of the fastest-growing economies. Due to the strong democracy and its partnerships, India is set to become one of the top 3 economic powers in the world. In the year 2018 to 2019, India has experienced a growth in the GDP. India’s GDP is estimated to have increased by 7.2 per cent in 2017-18 and 7 per cent in 2018-19. Study reveals that the momentum in the economic growth is seen after some major economic reforms introduced in the economy. Over time India is set to emerge as the superpower after china. The GDP and the per capita income are on the rise thus indicating improved living standards and increase in income.

Some of the statistics reveal that India has retained its positing as the 3rd largest base for start-ups with 4750 companies. India’s workforce is expected to reach 160 to 170 million by 2020. Several factors can be instrumental for this growth and the surveys are conducted based on population growth, the participation of labour force and enrolment in education. With the improvement in economic conditions, an improvement of trade and investments is also seen.

How to Measure Economic Growth?

The growth of an economy can be directly measured in term of growth of the country’s GDP. The GDP is the acronym for gross domestic products which can be defined as the summation of the value of the goods and services produced by the country with a financial year. There is no single factor that can be taken as the benchmark for economic growth. Several factors contribute to the growth of an economy. The economists and the statisticians adopt several measures to understand economic growth. But GDP is the most frequently used method for measuring economic growth. Along with GDP, GNP is another important method to track economic growth. The GNP refers to the gross national products and can be defined as the measures the value of goods and services produced by a country and income generated from foreign investments. But both cannot be considered to be the absolute determining factors of economic growth. However, comparing the GDP and GNP can prove to be useful in calculating the income generated by the country and the income received the citizens of the country.

How Economic Growth Benefits You?

Improvements in Living Standards: The growth of the economy impacts the national income and directly impacts the currency of the country. The country experiencing economic growth becomes more powerful in terms of purchasing power. The currency of the country becomes more powerful in comparison to other country’s currency. It directly impacts the purchasing power of the citizens. With a stronger currency, the people tend to enjoy a better standard of living and growth in income. The per capita income of the country increase and thus the majority of the population can afford a better lifestyle and education.

See Also: Indian Economy

More Job Growth:  With the growth of the economy, the companies and the government will be able to provide better compensation and pay packages to the employees. Investment in employees has a record of creating better working conditions in economies throughout the world. The consumer spending rises due to improvement in employment conditions leading to an increase in the overall profits of private companies and government. Increase in the profits increases the investment capacity of private companies into other business ventures. To conclude, employment growth can be a crucial indicator of GDP growth in the country.

Growth on Capital Investment: Surveys reveal that the customers are mainly responsible for 2/3rd of the economic growth in the U.S. An increase in overall employment and increase in wages leads to increased purchase of goods, houses, electronics and appliances. This result in direct improvement of the business conditions and an increase in the country’s GDP. Companies tend to invest their profits into business ventures to create future growth. Other business investments include technological advancements and purchase of machinery. The investments made by these businesses are known as capital investments. So an economic growth directly results in the growth of capital investments and boosts the productivity and its profits of the companies.

Greener Energy: Countries with greater purchasing power can commission the implementation of greener energy resources. Economic growth enables countries to depend less on natural resources and fossil fuels. With the growth of the country’s GDP, financing the implementation of solar-based systems, hydel systems and windmills become easier. Utilization of greener energy is also a priority for a growing economy. The growth of an economy leads to a larger consumption of energy and thus it leads to polluting the environment if the economy fully depends on fossil fuels and natural resources for its energy requirements. Thus many countries are shifting to the usage of greener energy which is a major step towards environmental sustainability. With renewable energy resources, the countries can sustain economic growth by reducing investment in low carbon technologies and implement lesser usage of natural resources.

See Also: 5 Things Modi 2.0 Can Do To Boost The Economy

Disadvantages of Economic Growth:

The rapid growth in the GDP can impact the balance and cause undesirable changes in the economic and social scenario. The changes depend on the nature of growth. Some of the disadvantages of economic growth are as follows:

Risk related to higher inflation and higher interest rates:

  • Increase in the demand will lead to a shortage of supply. Thus the prices of commodities and goods rise leading to a conflict between micro objectives.
  • On the contrary, an increase in prices will lead the banks to raise the interest rates to control inflation. 

Effects on the environment:

  • Rise in demand also leads to an increase in consumerism which leads to an upsurge of pollution and waste.
  • It has often been seen that fast-growing economies cause the depletion of finite resources like petroleum, coal and fossil fuels. The economic growth may cause extraction of an unlimited quantity of natural resources.

The Threat posed by the inequality of income and wealth:

  • Rapid increase in the national income may lead to higher inequality and social divisions. The gains from the growth of the country may only reach a handful of individuals leading to a concentration of power within limited entities in the society.

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