An army of bigwigs congregated at a plush hotel in Delhi earlier this week. Ministers, their mandarins in tow, mingled with managers of vast multinationals, their lawyers, bankers and other finely suited antecedents. Many knew each other from previous such gatherings around the world, and met as if members of one extended family, waving at one another in the hotel lobby and later in the conference rooms, where economic issues headed the agenda.
So far, so familiar. But instead of fretting about the road out of recession or devising ways to shore up the banking system, the attendees at the World Economic Forum's latest annual summit on the Indian economy were considering the challenge of building "new highways", the creation of "world-class education", the benefits of "investing in girls" and ways of "driving inclusion and equitable growth".
In fact, save for references to the travails of the West, the delegates barely paused to consider the kinds of issues that continue to plague policymakers here, across Europe and in the US. The focus at the meeting in Delhi's Taj Palace Hotel was on the longer-term challenges faced by a country that for decades was marred by piecemeal and restrictive policy decisions, but now, emboldened by a wide ranging programme of reforms, aims to grow at 9 per cent a year in the medium term.
To be sure, the global financial crisis has dampened the advance. Opening the summit, India's Prime Minister, Manmohan Singh, said that the economy grew at a rate of 6.7 per cent in 2008–09, compared with an average of nearly 9 per cent in the five-year period preceding last year's financial storm. But there was no recession, and little of the panic that ensued in other parts of the world, where governments scrambled to rescue lenders teetering on the brink of collapse.
"In the current financial year, we also faced the adverse impact of an inadequate monsoon and the resultant slowdown in agriculture," Mr Singh added. "Nevertheless growth is expected to be around 6.5 per cent. There are clearly signs of an upturn in the economy. With a normal monsoon next year, we hope to achieve a growth rate of over 7 per cent."
Of the variety of challenges faced by the country, the parlous state of infrastructure is often brought up as among the most severe. Take roads, for instance. Local and foreign businessmen alike roll their eyes at the mention of India's network, the second largest in the world, which has suffered from years of neglect. The country has 71,000km of national highways, for example, but 16,000 of these are only single-lane roads.
To remedy the problem, the government has embarked on a mammoth public-private partnership scheme, with plans to build 7,000km of roads by the end of next year. Speaking at a session devoted to the subject, Kamal Nath, the minister in charge, said he was on track to achieve a target of building 20km per day by March – a leap from the snail-like pace of the past.
Education is another, pressing challenge. India accounts for 16 per cent of the world's population, and is expected to become the world's most populous country by 2050, according to a study by the Confederation of Indian industry. Around 265 million people will come of working age in the next 20 years, and by 2020 the average age in India will be 29 years, compared to 37 in China and 48 in Japan. This "demographic dividend", as it is often referred to by policymakers, promises to drive growth for decades to come, but only if India succeeds in equipping this mass of young people with the right skills. Sonal Varma, an India-based economist at Nomura, said the country's success, or lack thereof, in harnessing this resource could "make or break" its fortunes. There was no room for complacency, she added.
Other delegates at the summit – which marked its 25th anniversary this year – also acknowledged the need for the country to remain focused on meeting these and other challenges, lest they come together to undermine the high rates of growth and India's path out of poverty. For now, however, sipping tea, shaking hands and swapping business cards around the Taj, they seemed content to assume the best.Reuse content