India's economic growth rate could hit six per cent or more this year and a significant re-valuation of the rupee earlier this year was avoided only because of Reserve Bank of India intervention on the international foreign exchanges.
This is the assessment of visiting State Bank of India chairman A K Purwar, who terms the current and future prospects for the Indian economy as distinctly rosy.
If growth continues at present rates, he also predicts the elimination of basic poverty within a decade.
In an interview with rediff.com, Purwar said, "A lot of action is taking place in the Indian economy and it's a very interesting situation."
"If you look at global trends, the US is expecting growth rates of 3.6 per cent, the European economy is not doing too well. If you look at Asia barring China and India, there the growth rates are not very happy.
"Only two economies that are doing very well are China, followed by India."
Explaining that the Indian economy was in what he termed "a good state", Purwar said national growth rates had averaged five per cent since 1991.
"Following the events of 1991 and subsequent opening up of the Indian economy, the economy has grown consistently in the last decade or so by five per cent plus.
"In fact last year 2002-2003, it has been around 4.6 per cent and that is despite a negative growth of 3.2 per cent in agriculture," he said.
This year the assessment of the international community is that India's growth rate will be around six per cent, he said.
If things are favourable on the agriculture side and if some favourable things take place on the infrastructure side, the growth rate could be above six per cent, he added.
Asked if he could account for the change, Purwar said, "Let me give some background on how this situation has come about. Some kind of revolution has taken place in IT sector in the last 10 years. This was followed by a growth in telecom sector. The growth in these sectors also made a ripple effect on the rest of the economy."
Fundamental changes in agricultural practices eliminated food shortages, freeing up investment in other areas, he said.
"Throughout the 1960s we suffered food shortages. Fortunately, food shortages are no more there.
"Today investment is taking place in the infrastructure sector and that is going really well.
"The banking and financial sectors, barring the capital markets, are in a very healthy state. India, today, has one of the most competitive banking systems in the world.
"At $77 billion, we have one of the most healthy foreign exchange reserves in the world.
"The Indian rupee is also appreciating. Had RBI not intervened, the rupee -- currently trading at 47 to the dollar -- could have fallen to Rs 45 or below that," Purwar said.
Asked if it was realistic to anticipate the elimination of poverty within the foreseeable future, Purwar replied, "A lot of poverty alleviation has taken place and will continue to take place.
"If you go to rural areas the kind of poverty you used to see earlier is no more. We still have a lot of problems, but now we feel there could be an end to them.
"Eliminating poverty within a decade looks a distinct possibility for the first time. What could remain is a very marginal poverty," he said.
"I feel the IT revolution is likely to be duplicated in other sectors," Purwar said, adding that, "We are finding a huge amount of growth in the infrastructure sector -- roads, ports, bridges and power.
"Another likely growth engine is bio-technology sector. We are seeing lots of possibilities there -- new drugs, plants, crops and medicines.
"The growth in bio-tech may be much bigger than that in IT sector," Purwar said.
