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Economists: India's Economic Growth Potential Limited


Economists say India's economic growth potential is limited by resources and poorly developed infrastructure. VOA's Barry Wood followed a debate about India's economy at Washington's Brookings Institution and filed this report.

The Indian government is proudly stressing the country's economy is growing at a 9.2 percent annual rate. But economist Charles Kramer, of the International Monetary Fund, says at that rate resources may be stretched too thin, sparking inflation. He says signs of that are already apparent, including a doubling of housing prices in some cities and a 43 percent run up in stock prices last year.

Nirvikar Singh of the University of California says India is lagging behind China in developing the infrastructure needed for sustained growth. In addition, he says, there a pressing need for institutional reform.

"It's unglamorous, it's slow, it includes some very nitty gritty things like budgeting and accounting," he said. "There are detailed issues of modifying legal frameworks and procedures, tax administration, civil service reform."

World Bank economist Shantayan Devarajan found other shortcomings that, he says, blemish India's otherwise impressive economic performance. Despite a decade of rapid growth, he says, the rate of poverty alleviation is no greater than it was in the 1960s or 70s. He says the dynamic high tech service sector employs hardly more than 1 million of India's 400 million workers.

Prosperity in India, Devarajan says, comes slowly and mostly to the south.

"This is not growth overall," he noted. "It is growth in a concentrated group of states. And it is not surprising in that case that poverty hasn't been declining any faster."

Devarajan says not one city in India is able to provide its citizens with running water 24 hours a day.

India's market opening reforms began in 1991 following the rise of its economic rival China and the collapse of its major ally the Soviet Union.

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