Where will the Indian economy be in a couple of decades? time? As is usual, assorted pessimists are set to show how in the longer run, while we may not quite be all dead, India can at best hope to barely get by. And that too only if their statist recommendations are followed to the letter. It is amazing that even after a full decade where the economy achieved whatever it did, no thanks to public investment, there is so little hesitation in playing the same old tune. The resuscitation of statist doctrines have, of course, been aided by the inability of government to push reforms and by the resultant structural rigidities that have constrained economic activity ? an outcome that has been used to variously argue for fiscal activism.

It is a not unfamiliar strategy, like the quacks of old who would put leeches on the patient, and when that didn?t work, call for more leeches. Government seems overcome by a seizure. We can realistically expect little initiative from that quarter. What has happened with the present government may well be the fate of subsequent ones. That the common sense urge to reform will be sought to be thwarted by vested interests keen to protect their respective fiefdoms. Eventually, the urge itself will be banished to a back room in the face of electoral reverses. A cycle that is certain, unless politicians are able to give quality governance and stop feeling apologetic about reforms.

So, assuming constancy in the lukewarm approach of the Indian polity to reforms, what can we hope to expect in the long run from the Indian economy? The Indian economy grows because hundreds of millions of ordinary Indian families work day in and day out, for a better living for their families and a brighter future for their children; this is what gives us the steady 5.5 and 6 per cent, not State intervention. The latter could clean up the structural rigidities deriving from yet unreformed public service provisioning, unproductive government expenditure, overhang of several poor policy and laws, and finally shoddy implementation. It would help push growth rates up. While an excess of pessimism is inappropriate, the obverse would be plain foolish. It is best to assume a constant inefficiency in the implementation of reforms. Thus, governments of future days will always provide gainful employment to the advocates of reform.

Even with modest economic growth, of say 6 per cent per annum, and accepted projected population aggregates, by the year 2025 we would have a per capita income of about Rs 47,000 compared to Rs 20,300 in 2000-01, a growth of 3.4 per cent per annum. Income distribution is of course not equal ? some people get more, others less. We have constructed a frequency distribution approximating the population decile class-wise distribution of consumption for 1997, and used it to indicate the likely income distribution in the year 2000. The depiction, for our limited purpose, will suffice. Thus, in 2000 the top 10 per cent, or 102 million people, had annual per capita incomes averaging Rs 68,000; the next 10 per cent, or another 102 million people, had average incomes of Rs 26,000. The number of people with incomes in excess of $1,000 was about 110 million.

Compare this with what is likely to happen in 2025, even with modest economic growth. About 150 million people will have annual incomes of over $3,000 (at 2000-01 prices). The top 30 per cent, or 420 million people, may have annual incomes of Rs 49,000 and more, ie, over $1,000. Another 240 million people will have incomes of over $800. A total of 1,120 million people (or 80 per cent of the total) in 2025 will have incomes that are more than what the second highest decile (80 to 90 percentile) of the population earn today.

This India of tomorrow would not be a rich country even by the standards of 1980, leave alone 2025. Most of our neighbours almost certainly will be even further ahead of us than they are now. But in comparison to the India of 2000, it will be a radically changed economy. Even with modest year-on-year growth, the inviolate fact of the nature of the inherent asymmetry in the distribution of income will magnify the extent of economic empowerment that will unfold. The manifold increase in the consumption of goods and services by the increasingly economically empowered and numerically large middle income groups will make this a major market and will drive the course of economic growth over the next few decades. That is, if the government does not fall down on its job so badly that we will miss even the inevitable!

Saumitra Chaudhuri is economic advisor to ICRA (Investment Information and Credit Rating Agency) and editor of Money and Finance, the ICRA bulletin