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Indias Long-Term Growth Experience
Lessons and Prospects
power. Measured in nominal US dollars, Indias economy has risen from a low
rank of 50 in 1979 to 12th position in 2003. In income-to-purchasing power parity,
India ranked fourth in the world in 2003, behind only the United States, China,
and Japan. Although still classified as a low-income country in terms of per capita
nominal US dollars because of its huge population, if present rates of growth
continue, India should reach low middle income status by the end of this decade.
Due to the closed nature of the Indian economy until the 1980s India continues
to be a small player in the arena of international trade and investment flows,
But with the recent opening up of the economy and rapid growth in the export
of goods and services, India is definitely gaining strength. The tremendous
surge in the export of services since 2001 is drawing international attention,
inducing many IT-based global services to move to India. Also, private capital
flows including foreign direct investment which were initially
very limited, are now showing dynamism.
During the 1970s, the debate in India centered on how to improve upon the historical
3 percent annual growth rate of the economy. Few would have predicted that this
sleeping giant would wake up to attain and sustain
an average growth rate of about 6 percent per annum for over 25 years. In fact,
with 7.9 percent growth during 200205, there is increasing optimism about
the economy achieving further growth. This situation has fueled a very lively
debate in India, primarily on two aspects. The first concerns the factors underlying
Indias long-term growth and the other relates to the sustainability of
Sadiq Ahmed reviews the debate in the context of Indias long-term growth
experience, opportunities, and challenges and examines the factors that helped
to achieve rapid economic growth during the past 25 years. He draws on his findings
to analyze the main constraints that are likely to affect the countrys
growth in the future and highlight the policies that are needed to ease them.
104 pages; ISBN 9788132101161
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