India’s manufacturing sector is moving out of costly and congested cities to rural areas in order to stay competitive. But poor infrastructure is hampering its growth
The global economic downturn has raised concerns about the effectiveness of conventional economic policies, which were designed for stabilization, and not for reviving growth in developing countries. Rural distress, spatial disparities, the gender divide and climate change, all combined with the threat of low and jobless growth for a prolonged period, make it important to reshape economic policy.
Monetary policy has taken the lead in efforts to revive global growth, with successive outbursts of interest rate cuts. However, macroeconomic stability was never a concern for young, fast-growing economies, as they can run external deficits by borrowing from advanced countries with an ageing population. Global risks were contained, as external deficits and debtor positions were concentrated in advanced economies. It seems monetary policy has run its course.
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