The Hindu : New Delhi News : `Optimism in economy a bloom'

Online edition of India's National Newspaper
Saturday, Oct 16, 2004

New Delhi

New Delhi

`Optimism in economy a bloom'

By Our Staff Reporter

NEW DELHI, OCT. 15. Stating that the present phase of "optimism" in the economy could be termed as bloom and not boom, some of India's leading economists today stressed that issues like the rising prices of crude oil in the international market, stability of policies on the domestic front and the government's execution of its reform agenda would decide the course of economic growth in the years to come.

Taking part in the Board of India Today Economists (BITE) Discussion on "The Coming Investment Boom" in the Capital, economists projected a growth of six to seven per cent in India's GDP in the current fiscal and inflation rate remaining around 6.5 per cent. They stressed that the key to rapid economic growth lay on rapid development of rural and urban infrastructure that includes roads, railways, power and telecom and called for more role of the State governments in the building of basic infrastructure.

The Congress MP, Jairam Ramesh, who moderated the discussion, said preliminary indicators in the economy gave a message of hope where the revival of broadband investment was a key factor. He stressed the need for giving positive signals to all the investors including those form other countries and asked the government to come with clear-cut policies on all crucial issues related to rapid growth of the economy.

Expressing concern over the government funds being diverted to give subsidy, Indira Rajaraman, RBI Professor, National Institute of Public Finance and Policy, suggested that the Centre should either write off all high interest loans given to State governments or incorporate it into "rural infrastructure fund" to boost growth. She also called for giving panchayats the right to tax agriculture sector to raise its resources and spend in on building infrastructure.

Bibek Debroy, Director, Rajiv Gandhi Institute for Contemporary Studies, stressed the need for enhancing efficiency of government machinery and re-energising panchayats and local bodies to fuel growth. He also questioned the current "investment shining campaign" and said growth would happen only when all what had been promised on investment front by various players actually happened.

Underlining the need for making Indian economy globally competitive, Siddhartha Ray, Chief Economist, Tata Group, said the need was to connect rural and urban economy. Ajit Ranade, Chief Economist, AV Birla Group, said growth of Indian economy also depended on two key factors -- depreciating value of rupee and unstable global environment while Shankar Acharya, Member, 12th Finance Commission, said public investment also needed to play significant role in economic development.

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