The robust performance of the Indian economy in recent years, with economic growth averaging 8.5 percent, has generated intense debate regarding India's future economic prospects. Indeed, the future of more than a billion people, many of whom still exist in degrading and unacceptable poverty and deprivation, depends critically on India's ability to grow at high rates. This paper, while examining the issue, argues that India's recent economic performance is a result of entering a virtuous circle of growth generated by some key structural drivers. The latter include a dynamic private sector, benign external environment and a well-functioning democracy. The paper also points out that high growth can be sustained only if necessary policies are adopted for removing binding constraints like poor infrastructure, stagnant agriculture and lack of fiscal space. The paper identifies education as the most critical sector requiring reforms, followed by public goods delivery and labour markets.
Dr. Amitendu Palit is visiting fellow with ICRIER, and was previously deputy economic adviser in the Indian Ministry of Finance, responsible for policies relating to India's balance of payments, foreign exchange reserves and private capital flows.
Rajiv Kumar is Director and Chief Executive of the Indian Council for Research on International Economic Relations (ICR IER), a New Delhi based economic policy think tank. He holds both a D.Phil in Economics from Oxford University and a PhD in Economics from Lucknow University.
Mr Karan Singh is Research Assistant at ICRIER, and was previously a Junior Environmental Economist at Madras School of Economics.