COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

WEF chief blows pessimistic about India

India's gross domestic product would not grow at more than 5.5 per cent while the fiscal deficit will be around 5.25-5.5 per cent of the GDP. These pessimistic warnings were given by Claude Smadja, managing director, World Economic Forum.

It may be noted that in 1996-97, India’s GDP had grown at 6.8 per cent and for the current fiscal year, the Reserve Bank had projected a growth of six per cent. The last budget has set a fiscal deficit target of 4.5 per cent.

" Smadja was speaking to the media on Sunday, on the eve of the two-day WEF summit in New Delhi. He said that with a growth rate of seven per cent for the past three years, there was a belief that India was on the path of eight per cent plus growth rate, which will lead to an economic take-off. Ironically, the present summit theme is: '1997: the year of real economic take off?'.

He came down heavily on the current political impasse, saying it would only worsen the slowing economy. "A few precious months will be wasted due to the political situation, and at a time when it is all so unsatisfactory."

Smadja blasted the three major political parties for their economic policies. He said their approach held little hope for future reforms, but felt that the states could individually offer scope for further liberalisation. "We need to shift our focus to what is happening in states like Andhra Pradesh, Gujarat, Haryana, Karnataka, Orissa, and West Bengal."

He pointed out agricultural growth this year will be only 2.5 per cent as against six per cent last year. Agriculture accounts for 25 per cent of India's GDP. Industrial production grew at 4.7 per cent in the first half, compared to 11 per cent last year.

He said the failure to push through insurance sector was a major failure and insisted that it was necessary to create a long-term debt market, which is essential for infrastructure development.

"In the next four years, India needs complete infrastructure improvement. Otherwise, it is headed for economic trouble," he said, calling for a true commitment to accelerate the process of improving, expanding and overhauling the infrastructure.

RELATED REPORTS:
Gujral confident of reforms future
Industry minister wants FIPB scrapped