‘Demography, per-capita income, key drivers for economic growth’

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With India achieving around 8% GDP growth for the last eight quarters, the key question that poses before everybody’s mind is that whether the India growth story is secular and sustainable?

Participating in the panel discussion on “Key Economic Drivers For Indian Economy” at CAPAM 2007, annual conference on capital market organised by FICCI in Mumbai, all the speakers were on a similar view that India 's young demography, rising per-capita income, openness to trade, channalisation of investment and deregulation will be the key drivers for India’s strong economic growth.

Participating in the discussion, Subir Gokarn, executive director & Chief Economist, Crisil pointed out that the Indian growth is moreover driven by domestic factors and may not vary much in next five years and so is less vulnerable to global factors. He raised his concern over the low pace of fresh capacity creation in manufacturing sector and pointed to the fact that the present rise in the industrial production is because of the efficient utilization of existing capacities.

“Now that the license raj has been done away with and relaxation of rules in labour laws, manufacturing sector is going to play a major part in the economic growth of the nation. Also lot of investment in infrastructure sectors like roads, power, telecom and port would definitely boost trade and investment domestically”, felt MK Sinha, executive director, Business Development & Corporate Advisory, IDFC Ltd.

On a similar note Ajit Ranade, chief economist, Aditya Birla Group said, “Rising corporate earnings, spending, consuming and paying taxes by a increasing labour force which is growing at a pace of 2.4% per annum compared to 1.7% growth in population is also key to our economic growth.”

The rural India where 70% of our population resides, is growingly linked with the main economy. Because of the policy and commercial initiatives taken in that direction will certainly boost the economic growth in a big way, said, Joseph Massey, dy MD, MCX.