Sustaining High Rates of Economic Growth in India

Abstract

Keeping the current state of the economy in mind and the on-going process of economic reforms, we suggest measures to strengthen India's growth strategy. Briefly put, we suggest a strategy focusing on export-led growth, which among other things requires greater emphasis on special economic zones, and openness of the economy, liberalization in India's labor laws, dereservation of products for the small scale industry and other measures for the deregulation of India's private sector. Second, fiscal consolidation, which urgently requires expenditure reform to include a much smaller level of explicit and implicit subsidies, large scale disinvestment of India's public sector, and a major reduction in the size of the government, among other things. Third, global competitiveness so as to attract large-scale foreign direct investment for infrastructure development and export-oriented activities, and finally, liberalization and deregulation of India's information technology industry.