India can sustain an economic growth of 8-10 pc but a number of basic challenges are acting as handbrakes on development and need to be urgently addressed, says a report.
NEW DELHI: India can sustain an economic growth of 8-10 percent but a number of basic challenges are acting as handbrakes on development and need to be urgently addressed, says a new report released on Saturday.
Although the need to spruce up infrastructure is well-known, civil society and the private sector must collaborate to ensure governance, says the study by the World Economic Forum (WEF) and the Confederation of Indian Industry (CII).
"Much can be gained by removing constraints inherent in inefficient government bureaucracies, complex tax regulations and labour market rigidities," adds the report India@Risk 2007 released a day ahead of their business summit here.
"Decision-makers cannot assume tomorrow's growth story will read like today's. The economic fundamentals are in place but political dynamics and the scope of structural reforms are more likely to shape the next chapter."
The report features risk factors for India in six areas - freshwater shortages, demographics, oil peaks, geopolitical, climate change and societal - and gives insights into their trends, potential consequences and mitigation.
"The six risks are intimately interlinked and generate many other threats to the Indian economy," CII director-general Shamsher S. Mehta said, commenting on the study.
"Along with national security, the three pillars of security - human, economic and physical - also need to be raised to bring the economy to a position where the challenges can be met," he said.
He said in preparing the report, more than 40 experts from business, academia, non-government agencies and bureaucracy were asked to consider the drivers of India's recent growth, the latent opportunities and threats to progress.
"While sustained 8-10 percent growth for India is possible, it is not a given," warned Gareth Shepherd, who oversees economic and financial risks for the Davos-based WEF's Global Risk Programme.
"In the short-term, three economic threats loom large," he said, and identified them as rising rupee, an oil price shock and the collapse of asset prices in property or shares.
The report concludes that for a country like India, which is characterized by opportunities and ever-increasing regional and global interdependence, it was imperative to initiate collective action so as to mitigate such shared risks.
"Ring-fencing is no longer an option."
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