Academic-turned-bureaucrat Kaushik Basu, who termed Indian civil servants as "ace drivers caught in traffic jams", feels bureaucratic and farm reforms are must for the economy to grow at the 10 percent rate. However, the former Cornell University economics professor, who joined the government as cheif economic advisor last December, says India's growth story is more sustainable than China's and can outpace the world's fastest growing economy. Excerpts from an interview of Kaushik Basu:

Can India surpass China's rate of growth?
It is entirely possible for India to cross China's rate of growth. This is not for any narrow competitive feeling but simply that for India to break into a double-digit growth is not impossible for a couple of reasons. Vis-a-vis China, one great advantage of India is China's growth is very state-centric, the Chinese government plays a very major role and it is an extremely intelligent government that has steered and guided the whole economy. In India, government is a much smaller player in the Indian economy's performance. So, India's growth is coming from many different sources -- from big corporations to small entrepreneurs, to farmers -- innovation taking all over the place, whereas in China it is all orchestrated by the government. There, it always worries me, is that if the government begins to falter, since so much is in the hands of the government, the economy begins to falter. So, China has that risk. India does not have that risk very much because government has not played that bigger role in India's good performance. So, it's coming from many sources. That is what leads me to believe that India's growth is actually in some ways a more sustainable growth than China's.

When do you see India growing in double-digits?
I think within the next four years into double digit ... by FY'15. Surely, it's in the realm of possibility because 9 percent is virtually where we were before the economic downturn. So, we should be able to get back to 9 percent. One indicator which has gone a bit worse is our savings rate which had climbed to 36.4 percent of GDP is down to 32.5 percent. And, savings and growth are very closely related but I am expecting savings rate to actually improve in the next 2-3 years for two reasons. The stimulus package is being rolled back gradually, which should improve government's savings performance, and the demographic dividend … working age population gradually beginning to rise. It is going to help with our savings. With these two factors, I would expect the savings to crawl back again to roughly where it was earlier and with that I would expect growth to pick up a bit more. But with all that, we get to 9 per cent or so. We do need a couple of reforms to take into the 10 per cent per year.

What kind of reforms?
Basu: Bureaucratic reforms. You do want a more efficient decisionmaking system in government. I think if you can manage to work on that alone, 10 percent is achievable.

Red tapism?
Red tape is such a pejorative term. It's cumbersome decision making. Actually, red tape used to be a lot earlier, it has improved a little bit. But still our decision-making when it comes to enterprise and business, it's still too slow. It takes too long to take a decision on giving the green signal to enterprise to flourish, for a firm to close down, for a contract to be enforced. All this we have data. Compared to the countries which are booming and doing well, India does very poorly. If we can improve this ... this is a question of strict decision, government has to take a decision that we cut these red tapes, if we do that we are going to step into the 10 per cent growth because all the other factors are very well
poised for that.

The government expects to get back to 9 percent by the next fiscal, why do you think four years would be required for the next jump to 10 percent? It is just another one percentage point?
Nine to 10 percent is a big step. I am talking in terms of sustainable, not just sort of going into 10 once and dropping back. To hold on to 9 percent -- get back to business as usual, push up savings, etc. For sustainable 10 percent, you do need a couple of measures but these are not asking for the skies.

How difficult bureaucratic reforms will be?
Bureaucratic reforms -- at one level very easy, at another level very hard. Because once certain structures have been in place for 50 years even if it has outgrown their utility and serving no purpose, it needs a lot of determination and courage to cut through that. I feel with the beginning of the reforms in the indirect taxes, the Goods and Services Tax, you are going to see some reform in the tax system. It's a good sign. And, the Finance Minister has been talking about improvement in governance repeatedly. Actually, it was part of the budget speech. I can't tell you whether it will happen or not. But if we can make some improvement on that, on food distribution ... hopefully, there is going to be improvement with the Food Security Act ... improve some of the mechanisms of distribution of food. If these kinds of changes can be brought in then the 10 percent is there. I don't think these changes are impossible. We also need investment in infrastructure but that I think is going to happen. There you don't have to worry.

Where else do you see the need for reforms?
In agriculture, certainly. In agricultural production we need investment ... rural investment, basically. India's infrastructural investment in urban areas ... actually, India has woken up to its importance. So, we are going to see airports improving, ports improving, roads improving, industry roads improving. So, all that you can already see happening. But rural infrastructure, yes, there has been talk of this but pressure has to be kept up basically on rural irrigation more than anything else. If we can invest, there is enough enterprise among our farmers that once you provide them with the basic infrastructure, they are going to innovate … they are going to take agricultural productivity further. After all, agriculture can no longer be helped by increasing the size of the area or the people in agriculture. Already, in India's national income, 14.6 percent comes out of the agricultural sector and close to 60 percent of the labour is living of agriculture. It's a very lopsided ratio. So, we don't want more people, what we need is greater productivity. In fact, what we need is labour-intensive manufacturing sector to increase ... it absorbs this huge amount of labour that is sitting right now with agriculture.

PTI Economic Service