ADB Chief says Indian economy can grow 9-10 per cent

New Delhi, Mar 10(UNI) ADB President Harihiko Kuroda today offered support for reinvigorating Indian agriculture and made out a strong case for stepping up the reform process and rapid development of infrastructure to achieve an annual economic growth rate of nine to ten per cent.

Mr Kuroda told newspersons here the ADB expected the Indian economy to grow eight per cent, in line with a government forecast for 8.1 per cent growth.

"Indian economy is on the right track. As everyone expects Indian economy will grow by eight per cent or plus, and that means that high growth will continue this year and presumably in the next five to 10 years," he said.

"And growth can be accelerated to 9 to 10 per cent if a few conditions are met. One of them is improving the infrastructure.

Because of rapid growth, infrastructure is insufficient and over stretched," he said.

"We will increase our support for the government's efforts to improve the growth rate of the agricultural sector," Mr Kuroda said.

He said loans for developing the agribusiness sector, strengthening commodity markets and rural finance institutions and improving water resources management would account for 13 per cent of the proposed programme over the next three years.

Meanwhile, addressing a meeting organsied by the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Kuroda cautioned against the huge social and economic costs of ignoring the poverty-related education and health issues.

He said these continue to show disturbing gender gaps, large urban-rural differences and wide variation across states.

"Given the current pace and pattern of growth, India will not reach many of the non-income Millennium Development Goals for maternal mortality rates, infant mortality rates, or gender parity in secondary enrolment ratios within the stipulated time." He said these "harsh realities" present serious challenges for India's policy makers adding despite strong economic performance, job creation had not kept pace with a growing labour force.

"In fact, the rate of employment growth declined from 2.7 per cent per year in 1983-84 to one per cent in the period 1994-2000." Mr. Kuroda expressed concern over the deceleration in agriculture growth from more than three per cent a year between 1980 and the mid-1990s to a subsequent trend average of 1.9 per cent.

"Given the relatively low employment generation potential of the fast-growing services sector, the agriculture sector, on which the livelihood of the majority of Indians depends, needs to be reinvigorated," he said.

The way forward, Mr Kuroda said, was to focus on infrastructure development and policy reform to bring to fruition the efforts of the government to enhance the quality and reach of the rural infrastructure through the Bharat Nirman programme and the ambitious programmes for national highways, rural roads, railway freight corridors, power generation and transmission and urban infrastructure.

Along with infrastructure, Mr Kurado said policy reforms were imperative to improve the rate and pattern of economic growth.

He said, the bulk of ADB's ongoing operations in India, as well as the proposed programme for 2006-08 remained focused on three core areas, namely, transport, urban and energy infrastructure.

Regarding the transport sector Mr Kuroda said, "we are now working with the NHAI to see how best we can help the next phases of the highway development programme while attracting private participation and investment on a BOT basis." The Bank will soon take up a rural road project for Assam, Orissa and West Bengal. For upgrading weak road networks, projects are planned for Uttaranchal, North Eastern states, J&K and Jharkhand, he said.

Talking about the energy sector, Mr Kurado said, the Bank's state power sector loans focused on upgrading transmission, distribution and rural electrification and capacity building of power sector institutions.

The 2006-08 programme of the ADB, he said, will continue with projects to help upgrade the infrastructure of selected cities in the North East, J&K, Rajasthan and Uttaranchal, apart from assisting the government in implementing the National Urban Renewal Mission.

Speaking on the occassion Mr A K Purwar, Chairman, FICCI Banking and Financial Institutions Committee and Chairman, State Bank of India, noted the primary areas of constraints to achieving a double-digit GDP growth rates were agriculture and rural inclusion-- rural employment, food security, land and water availability; small and medium enterprises and infrastructure.

He said, India's strength of a huge skilled and semi-skilled work force, entrepreneurial expertise and natural resources is inadequately leveraged because of lack of infrastructure. This is also becoming a constraint on inter-state as well as global trade, he said.

While in New Delhi, Mr Kuroda met key officials, including Finance Minister P Chidambaram, private sector representatives, academics, and journalists.

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