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Shashank Bhide NCAER 15 September 2010

Sustaining India’s growth. Shashank Bhide NCAER 15 September 2010. The long-term story. Half full glass: - 20 year growth 7% (R-S) - 10 % Kelkar - 5.5 % (50 years) Goldman Sachs Half-empty glass: - Low Saving/Investment; Government Dis -saving - Inability to use labour productively

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Shashank Bhide NCAER 15 September 2010

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  1. Sustaining India’s growth Shashank BhideNCAER15 September 2010

  2. The long-term story • Half full glass: • - 20 year growth 7% (R-S) • - 10% Kelkar • - 5.5% (50 years) Goldman Sachs • Half-empty glass: • - Low Saving/Investment; Government Dis-saving • - Inability to use labour productively • - Services cannot outgrow manufacturing forever • - Agriculture, infrastructure, regional disparities.

  3. The makers and the breakers of growth • The drivers • Demography • Aspiring middle class • Good institutions • Low base of productivity • High TFP growth • The breakers • Fiscal pressures • Rising inequality • Rising regional disparity • Slow reforms • Poor governance • Fragile environment

  4. Sustainability framework

  5. The crude price shocks: $/barrel

  6. World output: % YOY

  7. GDP growth patterns (%YOY) Source: IMF WEOs

  8. Non-agricultural GDP growth: % YOY

  9. Accelerating GDP growth: %YOY (10 year moving average)

  10. Threats to sustainability of high growth • Fiscal sustainability • Weak social safety nets • Inadequate investments in human resources • Environmental sustainability

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