The Hindu Business Line : `Rein in fiscal deficit to let economy grow'

THE Indian economy will grow only at six per cent over the next five years as against the target of seven to eight per cent unless the Government reins in fiscal deficit and raises investment to improve the physical and social infrastructure in rural areas, the World Bank has said.

"India is likely to continue growth at six per cent over the next five years. It could be faster now due to an in-built dynamism in the services sector, but the key to India's growth lies in rural areas," Mr Michael Carter, Country Director, India, World Bank, said here on Tuesday.

Speaking at the sidelines of the `Knowledge forum - Rural services innovation summit', jointly organised by the FICCI and the World Bank, he said the other challenge was the fiscal deficit. The Government has to come up with innovative ideas for reallocating expenditure of not only the Centre but the States as well, he said.

Noting that innovation was the key principle of `development marketplace', Mr Carter defined innovation as the application of ideas - new or even existing - in new ways or in new fields, in order to solve problems.

Currently, the combined fiscal deficit of the Centre and the States stands at a whopping 11 per cent. Further, 70 per cent of the population lives in rural areas while agriculture contributes only 25 per cent to the gross domestic product.

To ensure further growth, it is important to bring in participation of these people in decision-making and support them by strengthening physical and social infrastructure — roads, power, drinking water, education, health and sanitation, he said. While laying emphasis on the importance of monitoring projects and reform measures, Dr Arjun Sengupta, Co-Chairman of the Economic Cell, All-India Congress Committee, said, "this was necessary to hasten the process of growth and development in rural sector."

Regarding rural development, Dr Sengupta said that while different areas in which services need to be provided are clearly identifiable, the bigger challenge was how to do that.

According to Dr Sengupta, innovative ideas that are context-specific needed to be developed to address these issues. He added that it is important to have a proper monitoring system to hold parties accountable. "The problem currently is that money is spent but does not reach the people," he said."