India’s Stunning Progress

Martin Wolf has a super piece in the Financial Times considering that must happen in India for the country to sustain the remarkable economic progress achieved in recent years. Fast growth creates economic, social, political and environmental challenges. India’s growth potential remains strong but, given the country’s increasing openness in the world economy, her fortunes will be guided increasingly by the health of the global economic system. Infrastructure bottlenecks must also be addressed especially in the way in which poor infrastructure damages the performance of India’s major cities.

Martin Wolf writes:

“The recent past offers at least four reasons for optimism. First, the rate of growth has been accelerating: over the five years up to and including 2008, the average annual rate of economic growth was 8.7 per cent, up from 6.5 per cent at the previous peak in 1999. Second, vastly higher savings and investment underpin this acceleration, with gross domestic savings up to 38 per cent of GDP in the financial year 2007-08. Third, India’s economy has globalised, with the ratio of trade in goods and services up to 51 per cent of GDP in the last quarter of 2008, up from 24 per cent a decade before. This was not far behind China’s 59 per cent of GDP.”

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