How fast are we growing? This is an important question. Monetary and fiscal policy depends on it, as also decisions of businesses. If we are in a real growth boom and companies behave as if we are riding a cycle, many profitable opportunities will be forgone. There was a time when policymakers were conservative in making claims and always exhorted sacrifice. The compulsions of coalition politics put paid to all that. But, to be fair, things are no longer easy to predict now that India has moved beyond the ?Hindu rate of growth? and onto a steady accelerator: an annual 4.5% in the second half of the 1970s, then 5%, 5.5%, 6% and then 7%. The rest of the world didn?t really believe it until as late as 2003, but there was enough serious work to show that investments were steadily rising, the economy was on a stable path and gradual reform was pushing it up the escalator.

All that is up for the grabs now. Conventional indicators urge caution, and yet there is enough in the air to suggest that a new era is upon us. Official commentators say 10%, but the doubting Thomases hint at 6-7%. There doesn?t seem to be enough to clinch the issue either way, but the uncertainty can and should be narrowed. Attempts can be made, now that higher-than-trend growth is no longer a ?pie dream?.

Economics, to be sure, is a dismal science. If the investment rate is 31%, as last reported, and the productivity of capital is what it was (as the Plan documents say), we cannot go much beyond 7% growth. The fiscal overhang is still high, and so caution is called for.

But there are some new experiences. There are also some new drags. What can we make of all this?

With better ways of doing things, factor productivity of inputs/resources must surely be rising in a manner that makes looking at Solow time trends quite unhelpful. In the information era, technological change is not what it used to be.

Before we give examples, two other features are noteworthy. Firms and enterprises are showing unimaginable new ways of overcoming problems, and fast growth and high expectations have given us a whole new dimension to quality. The economy is shifting from ?we can produce this or that? to the confidence of ?we can lick this problem and make money?.

Did you know that we are one of the most energy efficient economies in the world today? According to the Paris-based International Energy Agency, energy consumption per $2,000 of GDP is between 0.14 kg of energy and 0.16 in countries like India, UK and Japan, but is between 0.23 and 0.27 kgoe in countries like the US, China and Canada. Capacity addition wise, and in growth of generation, our electricity sector has done miserably in the reform period with the lowest growth rate in both capacity and generation in our history from 1991 onwards. But the Indian economy has responded brilliantly by using energy frugally over a large domain by installing captive power and by using existing capacity well, although the last is now difficult, since all the easy gains have been garnered. Yet, this is something to ponder and gloat on: large industries, thousands of small units and farms responding to a crisis positively.

In agriculture, the economy is definitely moving up the value chain, even if the growth rate is low and resource constraints are severe, or perhaps because of that. As water and land become more and more scarce, technology is coming to matter more?as in cotton?s BT seeds phenomenon. More generally, the emphasis on exports and services has not changed the quantities to the extent that it has changed quality (and flexibility in response to changing demand), and this has very favourable effects. For example, a challenge being posed is that since there is a lot of small energy producing equipment, or captive power, a new breed of technocrats is talking of converting it all to renewables based on photovoltaics or waste, by retooling and IT-based reworking. An NRI is talking of making cars more efficient in a simple manner. The IT revolution is moving over from outsourcing to systematising the way we do things. A business leader I know talks of call centres for farmers. There are exciting days ahead, I reckon.

All this does not mean that we should depend on businesses and farmers licking all the shortages of public infrastructure and primary resources. If, like China, we had no problems here, economic growth would have been much higher?and in sectors that need a boost for a more equitable distribution of national income.

The big fact is that India has moved on to a higher growth path, and whatever the shortcomings, there is still higher growth out there at the far end of the rainbow. This, of course, is on the assumption that we don?t slip towards our infamous propensity to spoil a good show.

?The author is a former Union minister for power, planning & science, and was vice-chancellor of JNU. Email: alagh@icenet.net