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Effects of India's Growth On The Global Economy and Environment
Effects of India's Growth On The Global Economy and Environment
Outline of presentation
Stylised Facts on Indias growth and poverty. Broad drivers of growth in India. Implications of India's success for other countries. Policy lessons learnt that may have relevance for other countries
Annual 3.7% Real GDP Growth Annual 1.5% Real GDP per Capita Growth
3.8%
4.4%
5.8%
Poverty
Findings
The average HDI has risen in the 1990s, the coefficient of variation has fallen
These numbers are therefore quite consistent with the conclusion that inter-state disparities in well-being have not worsened in the 1990s 11
Drivers of Growth
Quarter century of strong economic growth built a momentum of sustained growth; average 5% per annum. Services driven growth, where services account for nearly 60% of GDP today. More open economy (to external trade and investment); fall in applied tariffs from over 100% in 1991 to 12% in 2006.
Drivers of Growth
Demographic dividend of a young population:
Working population nearly 60% of total. Household savings rose from around 15-16 % of GDP in late 1980s to 22-24 percent in recent years
While India may displace other countries in markets for high-tech products, it would create space for other countries to increase production of light manufactures, agriculture and a large number of services. Improvement in the range and quality of exports from India may create substantial opportunities and welfare benefits to the world. The welfare benefit for EU is one of the highest in the world valued at over 3 trillion dollars. Indian companies would invest abroad in both developed and developing countries.
Would the poor be able to benefit from these developments, or would they remain outside any benefits, especially if most FDI goes to resource-intensive industries?
Where will interests be competitive, e.g would India divert indirectly investment resources away from African economies?
Policy Lessons
Investment in research and technology, removal of the mis-match in availability and need of skills, and removal of infrastructural bottlenecks both of physical and social infrastructure is crucial for sustaining growth. Essential to maintain price stability. Importance of fiscal consolidation. This improves the Government credibility and reduces crowding out. It also provides the fiscal space for allocating larger resources for capital investment, especially in social and economic infrastructure. A supportive international environment with low levels of protection is essential to sustain growth and poverty reduction in developing countries.