DMPQ :Recently a term virtuous cycle was used in the economic survey. Explain the term virtuous cycle.

A target of USD 5 trillion economy by 2024-2025 was laid in the economic survey. To achieve this  virtuous cycle term was used. It consists of exports, investments and savings. When these three forces will work in tandem there will be better chances of attaining the required growth rate and hence the target.  Investment, especially private investment, is the “key driver” that drives demand, creates capacity, increases labour productivity, introduces new technology, allows creative destruction, and generates jobs. Exports must form an integral part of the growth model because higher savings preclude domestic consumption as the driver of final demand. Similarly, job creation is driven by this virtuous cycle. While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific activity. When examined across the entire value chain, capital investment fosters job creation as the production of capital goods, research & development and supply chains generate jobs.

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