This monograph by a Sector Director of the Poverty Reduction and Economic Management unit of World Bank seeks to synthesise the existing knowledge and the underlying debate about India'slong-term growth. Though much has been written about India'sgrowth experience, this book under review seeks to answer two key questions?what explains growth and what needs to be done to further accelerate and sustain rapid growth.
Rapid growth since 1980 has transformed India from the world's50th ranked economy to the 12th largest in 2003. When income is measured with regard to the purchasing power parity, India'seconomy moves to the fourth place?after the United Sates, Japan and China. Along with income expansion, India'sincreasingly outward orientation is making it an important player in the global economy. Already it is a major global service provider in the area of information technology and related services.
The growing optimism about India'seconomy is leading to a surge in world investment. India'seconomic transformation is a recent development. Even during the 1970s, the debate in India centred on what could be done to push the economy out of the narrow bonds of the historical 3 per cent annual growth rate. Critics humorously called this low average commercial growth rate the ?Hindu growth rate?. Few would have predicted this as ?sleeping giant?, vested with the world'ssecond highest population, would suddenly start rolling and sustain an average growth rate of 6 per cent per annum over the past 25 years. For instance, the growth rate during 2002-2005 is estimated to be 7.9 per cent and prospects are seen for increasing this to a sustained growth rate of 8 per cent in the next two years.
This monograph tries to provide answers to questions like what factors have allowed India to achieve such rapid rates of growth? How can India sustain the growth momentum? In order to provide answers to these questions, India'sgrowth experience has been broken down by the author into two distinct phases?the first phase running from 1950 to 1980 and the second from 1980-2004.
An analysis of this monograph shows that India'smovement to a higher growth path happened in phase II, owing mainly to a major shift in development strategy and associated politics, which started in the 1980s.
This monograph by one whose research and interest are in areas of macro-economic policy, public finance, trade and development, argues that the growth rate can be sustained because of a number of favourable factors?a growing labour force, a falling dependency ratio, rising savings and investment rates, expanding foreign and direct investment with related technology transfer, and a dynamic private sector.
The author has made some suggestions for the growth to continue and these include an overhaul of the labour laws in the formal sector so as to ensure a proper balance between employment flexibility and the protection of worker'srights; greater investment in basic education; and reforms in the public sector by instituting a major overhaul of the underlying institutional arrangements for public services.
This is a book meant essentially for policy planners and students of economics.
(Sage Publications, B 1/11 Mohan Cooperative Industrial Area, Mathura Road, New Delhi-110 044.)