If growth does rise as expected by the UN survey, India will move out of the poverty trap in a few years. Once the GDP growth crosses 6.5 per cent, not only do new job seekers gain employment, such high growth also makes a draft on the backlog of unemployed. It will be devoutly wished that the survey's forecast (which conforms to the scenario the Planning Commission has in mind) comes true. But what if the World Bank's prognosis turns out to be closer to reality? The employment picture will be gloomy.

It is no use saying that the World Bank is being overly pessimistic. Agricultural output, notably foodgrains production, is subject to fairly steepfluctuations. Export growth is weak, and the international environment remains uncertain though less so than it was last year. Domestic demand prospects remain murky, so there is no telling how soon capacity utlisation in industry will peak and trigger an investment revival.

Both the international agencies make much of the fact that India has weathered the South East Asian currency crisis, thanks to its controls on capital movement and gradual (but not competitive) currency depreciation; and to the large domestic market. But this analysis misses the fact that India has had to pay a price in terms of negligible export and this hurt the domestic economy; a 6 to 7 per cent GDP growth requires an export growth of 14 to 15 per cent; a shortfall in exports results in production in excess of demand, and the consequent slack in capacity utilisation slows down new investment.

Besides, in 1998-99, the trade deficit bloated despite low prices of oil imports. The current account deficit is headed towards 2.5 per centof GDP (World Bank). But for the $4 billion garnered by the Resurgent India Bonds, the foreign currency reserves would have come under pressure.

The UN survey's forecasts accent what India can achieve. The World Bank takes a view on what is likely. So the latter focusses on the need for increased aid to reduce poverty in a situation where employment growth could slow down. Besides, the country has to contend with the fiscal crisis at the Centre and in the states; the latter have to take care of the pay commission award, and the former is simply not able to curb expenditure and shore up tax revenues. On the cards is a retreat in social sector spending. Finally, the combined fiscal deficits of the Centre and the states will pre-empt savings, harden interest and dampen investment.