Economic and Political Situation in a Developing Country (India) Essay

Economic and Political Situation in a Developing Country (India) - Essay Example The research paper Economic and Political Situation in India discusses the Foreign Trade Policy of the country and Indian economy’s resiliency. India's economic growth and foreign trade has taken new dimensions in recent years and it has expanded considerably. Looking at the huge population base of India, this is indeed a good sign for the country and the world economy. For last several years, India’s GDP is growing at the average rate of more than 7 percent; however in order to maintain high economic growth rate and a recognition in the International arena, India needs to continue with high-powered performance in foreign trade. India's major policy initiatives began in July 1991, which catapulted the country in the high growth rate trajectory. The reforms undertaken were responsible for high export growth rates in the last few years. International trade is likely to become a major stronghold of the Indian economy if the country continues with more reforms in years to c ome. An independent monetary system is essential for a country to manage macroeconomic factors and for the smooth economic growth of the country. In this perspective, it is pertinent to study the monetary system of India. The Reserve Bank of India (RBI), the central bank, has money management policy in the form of regulating base interest rates and making changes in Cash Reserve Ratio. Objective is to contain inflation rate and liquidity in the market to stabilize macro economy of the country. Besides, RBI also announces a credit policy every quarter.