The Hindu : New Delhi News : India can achieve 8 per cent growth, says World Bank

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Friday, Apr 08, 2005

New Delhi

New Delhi

India can achieve 8 per cent growth, says World Bank

By Our Special Correspondent

NEW DELHI, APRIL 7. Though the Prime Minister, Manmohan Singh, on Tuesday expressed pessimism about India achieving a GDP (gross domestic product) growth of eight per cent during the Tenth Plan period, the World Bank on Wednesday exuded confidence on higher rate of growth, albeit with faster reforms.

According to the World bank Country Director, Michael F. Carter, India's trend growth rate has been about five to six per cent, although it has the potential to achieve eight per cent growth. "We are not yet at the potential growth rate, but the underline growth rate has just started accelerating," he said, addressing the Forum of Financial Writers (FFW) here.

The higher growth rate, however, can only be achieved if the Indian Government undertakes faster reforms. Top priority would have to be accorded to devising ways and means of attracting greater private investments, improvement and development of the country's infrastructure and, more importantly, fiscal consolidation.

To a question on what he thought of closer trade ties with China, Mr. Carter noted that although over the years, India-China trade has grown at a very fast pace, he felt that enhancing trade through the multilateral route was a better bet than bilateral trade.

"India," he said, "is visibly a far different country and a far richer country now," and this he noted has come about with the liberalisation drive over the past decade and more. The result is visible in the country's high export growth, the globally competitive automobile sector and the high-growth services sector. If this trend continues, "India can be a major player in the competitive global environment," he said.

He said that India had greater challenges ahead. And the greatest of them all is the task of lifting over 300 million people from poverty, especially in Bihar, Orissa and Jharkhand where the social sector programmes have not yet touched a vast majority of the population.

Speaking on the sidelines of the interaction with FFW, Mr. Carter said the Bank was likely to extend a loan of $450 million for post-tsunami reconstruction in Tamil Nadu and Pondicherry. This would be part of the $1.2-billion assistance that is required for reconstruction work in Tamil Nadu, Kerala, Andhra Pradesh and Pondicherry as per the estimates made by the Bank, the ADB and the United Nations recently.

"We began negotiations for the IDA credit with the Centre and State Governments on Saturday. Our expectation is that it would be about $450 million." An additional $60 million is to be provided by way of reallocation of the existing loans.

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