India's Growth Prospects Revisited

During the past year a number of studies have made very optimistic projections about India's medium- and long-term growth prospects. The forecasts of a 7 per cent plus growth rate in these studies have been based on the demographic outlook for India, projected trends in productivity, strength of the country's institutions and an optimism about reforms. However, a critical examination of these factors suggests that India will grow closer to 5.5-6 per cent a year rather than by 7 per cent. It is still worth emphasising that a 5.5-6 per cent average growth is creditable for a large and diverse society and it implies a reasonably healthy per capita income growth of 4 per cent a year.