'Accelerate reforms for 7.5% growth'

Economic think-tank Indian Council for Research on International Economic Relations has warned that higher economic growth of 7-7.5 per cent annually cannot be achieved in the next five years unless the government accelerates reforms.

"Economic policy and institutional reforms will have to be accelerated if we are to move from an average 6.1 per cent growth during 1992-2004 to 7-7.5 per cent range over the next five years," ICRIER director Arvind Virmani said.

The trend in average GDP growth, which peaked to about 7 per cent during 1994-97, started sliding in the last few years, he said, delivering a lecture on 'Reality and myths of India's economic growth', in New Delhi on Monday night.

Despite CSO estimates of 8.1 per cent GDP growth in 2003-04, the ICRIER chief cautioned: "The current growth trends are in a downward direction."

Comparing growth trends during the two phases, 1951-1979 and 1980-2004, he said, "Though the Indian economy performed much better after Independence than before, economic policy left a lot to be desired."

Virmani termed the 3.5 per cent average GDP growth during 1951-79 as the "Socialist Rate of Growth" and the 5.8 per cent attained during 1980-2004 as the "Bharatiya Rate of Growth".

The GDP growth averaged 4.1 per cent during 1951-65 but slipped to 2.9 per cent in 1965-79, he said.

The growth, however, picked up from 1980 to clock 5.5 per cent during 1980-91 and further accelerated to 6.1 per cent in 1992-2004, he added.

Economic policy based on the Nehru-Mahalanobis model of 1951-65 fathered the disastrous socialist rate of growth policies of 1965-80 in which growth collapsed and per capita GDP barely grew, Virmani said.

India's growth performance plummeted to the bottom of world ranking at 64 amongst 73 countries during this period. The ranking now stands at eighth among 86 nations.

Virmani also said the poverty rate grew by 0.2 per cent during the three decades before 1980. It started falling and was down by 0.6 per cent in recent years.

Despite the improvement in 1980s and early 1990s, he said growth could not be accelerated as reforms were not only incomplete, but lacked credibility.

Moreover, he said governance deteriorated in the recent years.