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Reforms in labour, land and higher education sectors were the most crucial factors for India to sustain its economic growth in the next 15 years and become a prominent global economic power, according to Prof. Arvind Panagariya, Jagdish Bhagwati Professor of Indian Political Economy at Columbia University, New York.
Delivering a lecture on “India in the Global Context: The Next 15 Years” at IBS Hyderabad Campus today, he highlighted the importance of labour movement from agriculture to manufacturing which has not taken place at the required pace.
Prof. Panagariya stated that when one considers the recent economic growth of India, it would fall in the category of an emerging economy.
GDP growth in the last 5 or 6 years has been 8-9 per cent in real rupee terms. Discounting for inflation which is around 6-8 per cent in the corresponding period, growth would be around 14-17 per cent in nominal rupee terms and in dollar terms the growth would be around 13 per cent owing to exchange rate differentials.
He was optimistic that India can sustain the growth in future to emerge as the third largest economy in the world in 5 years.
In his opinion, India has all the prerequisites to grow at 10 per cent per annum in the years to come.
Agri's Gdp share
Prof. Pangariya noted, that the share of GDP from agriculture sector is declining, which is typical to any economy in transition phase. Agriculture contribution to GDP was 30 per cent in 1991, which reduced to 15 per cent today.
Reforms in India have not adequately addressed the constraints. While capital markets have been enjoying priority in the reform process, land and labour reforms have been largely ignored.
Land ownership is still governed by the laws dating back to 1882, enacted by the British.
Speaking on the occasion Prof. J. Mahender Reddy, Vice-Chancellor, IFHE University, warned that high inflation, high fiscal deficits, recession in developed economies, poor infrastructure and rampant corruption could become major stumbling blocks in the Indian growth process.
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