Indian can sustain 9-10 per cent growth: Expert
The GDP (gross domestic product) growth is set to accelerate to 10 per cent as the figures speak for themselves, said the expert.india Updated: Nov 04, 2006 17:09 IST
The Indian economy will be able to sustain a 9-10 per cent growth, despite a few deterrents like declining fertility rates and poverty, says a leading economist.
"India is at a structural break. The GDP (gross domestic product) growth is set to accelerate to 10 per cent as the figures speak for themselves," said Surjit Singh Bhalla, chief executive of Oxus Research and Investments, a Delhi-based economic research, asset management and emerging-markets advisory firm.
He was speaking at a discussion on mid-year review of the Indian economy held at the India International Centre on Saturday.
"The fertility level is dropping faster than expected in the country and recently in Orissa it has declined from 2.5 to 2.4 per cent," he said.
A decline in fertility rates results in the decline of young population, which in turn increases the number of pensioners.
Saying that the current official figure of the poverty rate being 22 per cent was disputable, he added, "The survey done by NSS (National Sample Survey) showing the poverty rate is approximately 22 per cent misses out on 55 per cent of national accounts consumption, including food consumption rates, which are very important factors to determine the level of consumption.
"According to some measures, the poverty rate is 43 per cent while according to others it is 23 per cent," Bhalla added.
He emphasised: "Agricultural growth as such was lower in the last decade. However, it is constant at 2.9 per cent except for the 1970s when it was 1.9 per cent.
"Share of agriculture is now below 20 per cent and it is rapidly declining," he said.
"The growth of industry at above eight per cent seems likely and if industry grows at nine per cent, GDP will grow at eight per cent and if it increases by 10 per cent then GDP will grow at 10 per cent."
However, he also pointed out the fact that almost all the developing countries of the world have witnessed an eight per cent growth in industry, except for India, which has not reached that level even once.
"This has happened due the tightening of our policies and interest rates in the mid-1990s when the interest rates shot up to 10-12 per cent," he averred.
Speaking on India's growth vis-à-vis China's, he said, "Chinese savings and investment rates are set to decline and India's to increase. The Indian growth rate is set to exceed China's on a sustained basis by 2010."
First Published: Nov 04, 2006 17:09 IST