India's Economy Primed To Grow 10 Percent A Year
KUALA LUMPUR, Malaysia (AP) — India's economy could easily grow 10 percent a year if the government makes dramatic improvements to infrastructure, boosts productivity and improves education standards, a top Indian policymaker said Tuesday.
At a time when developed countries are barely growing, India expects to achieve a growth rate of 8.5 percent this year and 9 percent in 2011, said Montek Singh Ahluwalia, deputy chairman of the Planning Commission, a government body that draws up five-yearly economic development plans. The latest plan ends in 2012.
Ahluwalia, who was in Kuala Lumpur to attend a seminar, told reporters that economic growth of 9 to 10 percent is a "reasonable target" to aim for in the next plan, which will run from 2012 to 2017.
"What does it require? Clearly lots of things," he said, putting infrastructure at the top of the list.
Some 800 million Indians survive on less than $2 a day, according to World Bank estimates, which show the benefits of more than a decade of rapid economic growth have not been evenly spread.
Ahluwalia said 20 to 30 percent of India's 1 billion people at the bottom of the income ladder may not be getting much of a boost from the country's booming economy. But neither are the benefits going only to the top 5 to 10 percent of earners, he said.
"There is a tremendous spillover benefit of growth," he said. "Is it desirable? Definitely it is desirable. The only way that large segments of the middle income (group) are going to be pulled up is by rapid growth," he said.
India estimates it will need $1 trillion of investment in infrastructure projects by 2017 to build more airports, sea ports, highways, clean energy plants, railways and communications networks. In the current five-year plan, the investment in infrastructure is set at $500 billion, or about 8 percent of gross domestic product.
"I don't think that is adequate for 9 to 10 percent growth. We need to do even more for infrastructure than is currently going on," said Ahluwalia, who holds a Cabinet minister's rank and reports directly to the prime minister.
He said about half of the investment will have to come from the private sector and bond financing to avoid overstretching banks. Currently, the private sector's share of infrastructure investment is 30 percent.
Ahluwalia said growth will also depend on the government reducing its fiscal deficit so that it can free up money for infrastructure, creating new sources of clean energy, raising agricultural productivity and boosting education levels.