India to take giant strides in economic growth

India needs to manage its growth tsunami

geetanjali

Geetanjali Minhas | July 30, 2010



The country is set to double its economic growth in six years, making it past the two-trillion dollar mark, believes Ramdeo Agrawal, co-founder and director of Motilal Oswal Securities Pvt Ltd. He was speaking at a seminar – India: Towards a two trillion economy… but how to make the growth inclusive - organised by the Observer Research Foundation in Mumbai.

“The robust growth of  Indian  economy  will be accompanied by challenges for the country . Unless handled well, it can widen the rich-poor gap in the country. India’s corporate sector and the government will have to change their mindsets, as this unstoppable reality will require a different line of thinking by everyone,” Agrawal said.

In 2001 India’s GDP was half a trillion dollars. In 2008, it rose to more than 1 trillion dollars.  At present the GDP is 1.3-1.4 trillion dollars.

“In the next 5-6   years  as income levels of population go  up,  India is waiting for a ‘tsunami’ of consumption . That is when it will produce double the goods and services. Many businesses will grow 5-6 times. The rise in income levels will yield three to four times increase in tax revenue for the government. The government has to proactively plan on how to spend this money effectively for wider social welfare like  food, housing, healthcare and education. Goods and Services Taxes if implemented across economic sectors in an effective and efficient manner will have a huge effect,”  he added.

Per capita global productivity is about 10,000 dollars. Global GDP stands at 60 trillion dollars with a population of 6 billion. i.e. 10,000 dollars per capita productivity. India with an average of 100 dollars per capita is 90%  away from the world average. But in the next 5-10 years it will be on  par with the world average. India will see an exponential demand for motorcycles, cars, housing  and infrastructure .

Expressing his concerns about corruption  in  India’s  potential  tsunami of growth Sudheendra Kulkarni, Chairman ORF,  emphasised  the role of  good governance and  said, “ a sustainable  economy  that  gives  respect to nature  and integrates with our knowledge is very essential. Most people in our country do not have access to toilets .If the poor don’t grow it affects others. If our governance does not support the tsunami of growth, it will be unmanageable.” 

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