The Indian economy is reaping the rewards of 15 years of reforms and if opened up further could achieve sustained growth of 8-10%, the International Monetary Fund (IMF) said Feb. 21."Not withstanding high world oil prices and a weak monsoon, the economy showed remarkable resilience in 2004/05, with growth (at 7.5%) remaining robust and becoming broader-based," the IMF said in a glowing review of Asia's third largest economy.
The Washington-based global lender said it supported the broad objectives of the Indian government's economic program, "in particular addressing infrastructure bottlenecks, alleviating rural poverty and deepening global integration." The IMF said the current favorable economic conditions provided New Delhi with the opportunity to speed up structural reforms, particularly measures to improve the business climate and to reform labor laws. This, it added, "would have a large pay-off by fostering private and foreign investment and job creation."
Late last year, Prime Minister Manmohan Singh said India should target a 10% growth rate in two to three years' time, calling it "eminently feasible".
"One of the critical challenges facing India is how to further develop manufacturing in order to create jobs for the more than 100 million people set to join the labor force in the next decade," said IMF's Asia and Pacific Department and mission chief for India, Wanda Tseng. "To do so, India needs to enhance its integration with the global economy, by continuing to lower trade tariffs, loosen sectoral limits on foreign direct investment, improve the business climate, make more flexible its labor laws and eliminate reservation of production to the small-scale sector."
Copyright Agence France-Presse, 2006