ADB bullish on the India growth story

Manila, Mar 20: The Asian Development Bank (ADB) is bullish on the India growth story of a sustained seven per cent plus annual growth rate, but would want the country to intensify policy initiatives relating to inclusive and broad-based growth, social development and good governance.

''While a seven per cent plus growth rate is both possible, and doable, much needs to be done in terms of strengthening infrastructure and helping India progress towards the Millennium Development Goals,'' ADB Chief Economist Ifzal Ali told visiting newspersons from India.

Mr Ali said productivity of the industrial sector needs to be scaled up and greater efforts are required to reinvigorate agricultural growth. On both these issues, the ADB was willing to provide a helping hand, he said.

Mr Ali, who hails from India, said the government's efforts at fiscal consolidation were laudable and while initiatives need to continue to spur revenues, it was equally important to reduce expenditures. This would involve better targeting of subsidies and a plausible strategy in this regard could be to slash subsidies to the better off sections while adequately compensating the poor.

He said Malaysia has successfully done this and India could take a cue from this.

Mr Ali noted that the high growth in India as also of entire Asia had taken place despite rising international crude oil prices.

He said countries like India had allowed the effect of soaring global oil prices to 'pass through.'

Mr Ali said a key challenge before the country now was to find jobs for the huge bulk of its young workforce and it was in the realm of the future as to whether this becomes a 'demographic dividends' or a 'demographic burden'. ''Expanding job opportunities was crucial, including those in the unorgansied sector,'' he said.

Mr Ali said the mantra for India's economic policy should be sustaining high growth rate, igniting the low growth rate in agriculture and making growth more inclusive and broad-based. He lauded the budgetary initiative of substantially hiking allocations to the eight flagship programmes of the UPA government, but warned that the efforts will not yield results untill the delivery systems are improved.

Referring to India's rising geo-political and economic stature, Mr Ali said these developments have tremendous potential for increasing trade, strengthening regional co-operation and peace in the region.

''The challenge for ADB is to assist India in taping these opportunities,'' Mr Ali remarked.

The well-known economist said the high global oil prices were here to stay, an important reason for this being the robust and demand from India and China.

He said a reason why India has been able to bear this brunt, without its growth getting adversely affected was the growing competitiveness of the industry and the services sectors.

Mr Ali highlighted how 2005 has been an exceptionally good year from Asia and was convinced that India was destined to play a key role in the future development in the Region. He was of the view that Regional arrangements would gather momentum in the years to come and India could be an important part of these.

UNI