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India is the second-largest emerging

country and has demonstrated the ability
to grow rapidly. While growth slowed down
in 201112, this was simply the adverse
impact of a global downturn, combined
with the emergence of some domestic
problems (which are now being resolved).
The short-term slowdown does not
mean a permanent shift to a lower
growth trajectory. India has strong
basic fundamentals, including a high
rate of savings, an increasingly skilled
labor force, a dynamic private sector
with hrstrate management capabilities
and increasing global competitiveness
in many areas. There are also some
dehciencies, most notably in the area oI
infrastructure. However, the Government
recognizes these weaknesses and
correcting them is a high priority.
The economy is therefore well positioned
to get back to a higher growth path
of around 8% per year, which it could
maintain for several years.
The return to faster growth will not
happen automatically. The Government
needs to work on several areas. First,
it must ensure a sound macroeconomic
environment, reversing the hscal
dehcit rise that took place Irom 2008
onward. Second, we need to rapidly
step up investment in infrastructure
from public sources and public private
partnerships. This is the single-biggest
supply-side constraint for Indias growth
and competitiveness. Third, we need
to bring our energy prices in line with
global prices through a gradual transition.
Fourth, the goods and services tax (GST)
will be a major step forward in indirect
taxation. Finally, we need to improve the
ease of doing business, where Indias
ranking is too low.
High levels of investment, especially
in infrastructure; continued economic
reforms, promoting higher levels of
productivity; and buoyant domestic
demand, rehecting the impact oI an
inclusive growth process, would drive
growth over the next 5 to 10 years. We
are seeing an underlying strengthening in
agricultural performance, which I expect
will continue. It needs to be supported
by a strong recovery in manufacturing.
India has done well in services, but not
as well in manufacturing. Special efforts
are needed to improve competitiveness in
manufacturing.
The longer-term perspective is therefore
one in which the current slowdown will
hopefully be overcome in the next two
years, and India will be back to average
annual growth of around 8%. This
growth should be inclusive, leading to a
substantial reduction in poverty and the
emergence of many more growth poles
across the country.
Growth should be
inclusive, leading
to a substantial
reduction in poverty
and the emergence
of many more
growth poles across
the country.
Egfl]c Kaf_` 9`dmoYdaY
Deputy Chairman, Planning Commission
Enabling the prospects 3
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