India Intelligence Report

UN Says 8% Sustained GDP Growth Possible


A United Nation Economic and Social Commission for Asia & Pacific study reported that India has all the ingredients in the economy for a sustained 8% growth rate in 2006-2008. It said that “inflation is likely to remain at about four per cent in 2006-2008, given the government’s commitment to reform, including strict fiscal prudence, monetary discipline, orderly movement of the rupee exchange rate, continued reduction of import duties and other indirect taxes, and removal of all quantitative restrictions on import of consumer goods.” 

Lavishing praise on the economy, the report said that Indian Gross Domestic Product (GDP) grew remarkably despite adverse global economic environment such as high oil prices, widening current account imbalances, and softening global trade. It predicted a 2.5-3% growth in the Agricultural sector, 8.5% in services, and 8% in industry. Services accounts for 50% of the Indian GDP and India is negotiating hard with Western nations to open up non-tariff trade barriers.


The last Indian budget has focused and invested heavily in agriculture and moderate encouragement for power and energy. While infrastructure itself did not get any substantial investments, it was not absent either. India needs massive investments of up to USD 50 billion in infrastructure alone and another USD 200 billion in power and energy sectors. Additionally, a further investment of USD 200 billion is required in social sector (such as education, healthcare, drinking water, sanitation). 

These investments have to either come externally or through internal adjustments such as Disinvestment of Government-owned public sector utilities or public and private sector savings and participation in the Indian equity exchanges. While the Government itself is committed to disinvestments, its communist and regional allies would not allow it to pursue a path of structural reform to achieve a growth of 8%. While communist bastion West Bengal itself is throwing ideology to the background in upcoming elections, it is hypocritical for the communists to hold the nation hostage at the Federal level.

India is a lonely success story in a region infested with failed states, terrorism, and internal strife. The only thing that is holding back the nation is narrow political ideology.