Recent Trends in the Indian Economy : A Giant in Expansion ＊1 国際審査部 参事役 ヨランダ・フェルナンデス・ロメン 要 旨 インドは、 「ヒンズー基準」とも言われた低い成長率に長年甘んじてきたが、ここ数年、 ついに離陸を果たし、安定した高成長を謳歌している。その要因は、旺盛な内需、経済自由 化の進展、そして財政状況の好転である。現在では、この高成長が、景気過熱の状況にある のではないかという議論を巻き起こすほどになっている。 インドが、マクロ経済運営や財政政策にある程度の成功を収めてきたことは疑う余地がな い。しかし、同時に、いまだに手ごわい多くの課題に直面しており、タイムリーに対応して いかないと、将来の成長を危うくしかねないことは明らかである。特に、政府は、今後更に 財政規律を維持するように努める必要がある中で、持続的かつ包括的な成長戦略を達成する ための歳出も必要となるため、難しい舵取りを要求されている。 とはいえ、現状を見ると、旺盛な内需、高い投資需要を満たす高い貯蓄率、インフラへの 投資、効率性の向上傾向、供給サイドのキャパシティ向上等、好材料がそろっており、今後 も中長期的に持続的な成長を維持することが予想される。 世界との関係に目を移せば、国際場裏におけるインドの政治的・経済的存在感は日増しに 増大している。特に、インド企業の中には、グローバル化の中で国際競争力を向上させ、欧 米企業をも買収するほどとなった企業もあり、インドのプレゼンス増大に大きな役割を果た しつつある。 本文では、第１章で経済の現状、第２章で構造的問題に対する政府の取り組みについて述 べた上で、第３章では注目を集めている２大国のインドと中国を比較することにより、その 特徴をより明瞭なものとしている。最後の第４章では今後の見通しについて述べている。 INTRODUCTION Dynamic economic growth in the last four years suggests that the Hindu−growth rate is a matter of the past. Brisk domestic demand, advances in economic liberalization, and fiscal consolidation have placed India in what appears to be a steady economic take−off after years of sluggish performance. However, vigorous economic growth has brought about some side effects that have unchained a debate on whether accelerating growth is putting the economy at the risk of overheating. While there is no doubt about the commendable macroeconomic and fiscal consolidation gained in recent times, the economy still faces formidable challenges in the road to development, and bottlenecks might undermine future growth in the absence of timely corrective actions. The major task for the government is to achieve a balance between fiscal discipline and development investment needs ＊１ Senior Economist, Advisor, Country Economic Analysis Department, JBIC. The paper contains the author’ s personal opinions and does not represent any official position of the Country Economic Analysis Department of the Japan Bank for International Cooperation. The author wants to thank the valuable comments by H. Suzuki and the important contribution of T. Nishihama. Any inconsistency of mistake in the article is, however, the author’ s solely responsibility. 226 開発金融研究所報 to sustain high and inclusive growth, and alleviate poverty. ing foreign firms in Europe and the United States. On the political arena, the Congress dominated United Progressive Alliance (UPA) won the last elections in 2004, but short of the required majority in Parliament relays on the Left Front’ s support. The political situation in the country is stable and post−election agreements adopted by the ruling coalition have proven long−lasting in spite of early misgivings −Sonia Gandhi relinquished her right to become the Prime Minister, and handed the responsibilities over the reformist Manmohan Singh to become the Congress party’ s President and its parliamentary leader instead. The division of labor has worked well so far with Mrs. Gandhi occasionally flagging fears about the speed and side effects of reform. At the time the new government was formed it was believed that due to ideological reasons opposition from the Left Front would paralyze economic liberalization. However, the blockade did not materialize and the Marxist party has opposed only selective issues, namely labor reforms and state owned enterprises’ privatization, but has supported instead trade liberalization, the removal of FDI’ s barriers, and the controversial establishment of special economic zones (SEZs)＊2. The article is divided into four sections. Section one describes the most recent trends in the economy, while section two focuses on the government’ s development policy and the structural constraints the country is facing. A brief analysis on the commonalities and differences between India and China is provided in section three, and section four elaborates on India’ s economic outlook. The government has given a new impulse to the country’ s timid stance in international relations, and India has gained worldwide prominence by swiftly upgrading its role as a political and economic partner after signing mega−deals with the US and Russia. The new profile has been sharpened by the emergence of globally competitive corporates in India that are acquir- Ⅰ．ECONOMIC PERFORMANCE AND RECENT TRENDS 1．GDP Growth GDP growth is fueled by strong domestic demand, which in turn is triggered by a balanced increase in consumption and investment. GDP grew at 9% in FY2005−06＊3, and at 9.2% GDP in FY2006−07. Gross domestic investment and saving ratios at above 30% of GDP show important structural changes occurred in the economy in recent years. On the supply side, the services sector remains the major source of growth contributing to more than half of GDP (54.1%), with industry at 27.6% of GDP (manufacturing at 16% of GDP) and agriculture at 18.3% of GDP. While there is a surge in manufacturing production driven by auto−parts, pharmaceuticals and textiles＊4, agriculture lags behind. The primary sector, comprising 60% of the labor force, is ＊２ The case of West Bengal is very illustrative; a traditionally left wing state dominated by the Left Front it has approved the most advanced liberalization measures in the country so far, including legislation and very generous land concessions for the settlement of the SEZs. ＊３ The Indian fiscal year runs from １ April to 31 March. ＊４ India, due to its higher quality standards and competitiveness, stands among the few countries that benefited from the phase−out of the Multi−Fiber Agreement in 2005. Textiles account for about 20％ of total exports. 2007年10月 第35号 227 Table 1：Comparative Selected Economic Indicators, 2006 GDP ($ bn) GDP per capita ($) GDP Growth (%) CPI (%) Current Account (% GDP) Exports Growth (%) Imports Growth (%) Total Public Debt ($ billion) Debt Service (% of exports) Pakistan India China Sri Lanka 128.8 837 6.2 8.0 −3.9 14.0 31.3 32.6 15.2 902 901 9.0 4.4 −1.3 22.7 22.9 734 11.5 2,544 1,945 10.0 1.5 7.0 23.0 24.0 972 17.7 27.4 1,322 7.0 12.0 −4.7 9.5 18.5 24.5 16.8 Source: CEAD and IMF constrained by low productivity levels, decreasing yields due to over−exploitation, underemployment, and vulnerability to weather shocks (monsoon). 2．Fiscal and Monetary Developments Economic growth has been accompanied by improved fiscal performance and the consolidated deficit has been reduced from 9.8% of GDP in FY2003−04 to 7.0% of GDP in FY2006− 2007 (Chart 1). The new budget (FY2007−08) projects a consolidated fiscal deficit of 6.2% of GDP and 3% at the central level, and seeks to sustain growth and control inflation by tackling supply−side problems. On public domestic debt, the total stock stands at 80% of GDP (58.7% at the central level). The government strategy aims to curb down the fiscal imbalance by increasing revenue and leaving expenditures untouched, albeit better targeted towards the delivery of social services. There are no concerns about domestic debt’ s sustainability. The implementation of the Fiscal Responsibility and Budget Management Act (FRBMA) in 2004 has brought about fiscal consolidation. The Act states that the revenue deficit must be eliminated by March 2009, and the fiscal deficit brought down to 3% of GDP in March 2008. In 228 開発金融研究所報 addition, the introduction of the VAT in 2005, together with significant streamlining following improvements in tax administration and budget management, has led to a higher level of revenue than planned. With tax collection growing at 27%, the total revenue to GDP ratio stood at 18% in FY2006−07 (agriculture is not taxed). However, the rationalization of public expenditure lags behind, and the costly and poorly targeted subsidies scheme remains untouched. Finances at the state level (devolution process) are shaping up for the first time after the introduction of the VAT in all states but one (Uttar Pradesh), and the successful 12th Finance Commission that has introduced the principles of the FRBMA to the states. Nevertheless, capacity limitations cast some doubts about the pace of fiscal consolidation at the state level. The government is committed to fiscal discipline and has announced new measures to broaden the tax base and improve compliance. One example is the planned introduction of the integrated Goods and Services Tax (GST) to replace an array of excises and minor taxes. The suppression of fiscal exemptions is also under consideration. In contrast, advances are modest on the expenditure side although the government is finally working on the rationalization of the fuel and kerosene subsidies as per the Ran- Chart 1：Fiscal Balance（% of GDP） 0 -1 -2 -3 -4 -5 -6 -7 -8 -9 -10 2002/03 2003/04 2004/05 2005/06 2006/07p Source: IMF garajan Committee recommendations; ( i ) a new pricing mechanism for petrol and diesel whereby oil companies have the freedom to set retail prices based on a trade parity price; ( ii ) customs duties reductions for petrol and diesel; (iii) restricting kerosene subsidies to below− poverty−line families; and (iv) gradual elimination of the LPG’ s subsidy. The new budget (FY2007−08), plans for substantial spending in physical infrastructure and defense but due to the improved fiscal performance social sectors will also benefit and health care and education spending are set to rise 23% and 34% respectively. Economic dynamism and larger disposable income have triggered high credit growth and a surge in consumption (mainly durables), facilitated by the low cost of borrowing given that interest rates grew below the inflation rate. Brisk private credit growth builds upon a low base and does not have a significant leverage yet. More than half of the lending is collateralized limiting the impact of potential defaults. With the inflation rate over 6.5% (mainly triggered by rising food prices owing to food short- ages) and all monetary aggregates expanding beyond targets the Reserve Bank of India (RBI) has intervened several times to control liquidity by lifting both interest rates and reserve requirements. The combination of fast growing credit and inflation has unleashed a debate on economic overheating＊5 in the country. However, overheating has been observed only in real estate (commercial and upper−middle class residences) and in the stock market. There are symptoms of demand−induced inflation as production units approach the limit of their capacity that might trigger supply constraints if adequate investments do not materialize. In order to contain inflationary forces the RBI is expected to remain strict on monetary tightening by controlling interest rates and reserve requirements. In addition, good prospects for the wheat harvest and better yields in pulses will contribute to curb down inflationary pressures by the end of the current fiscal year. The banking sector’ s vulnerability is low with capital adequacy ratio at 12%, high prudential requirements, and non performing loans (NPLs) at 1.5% of total outstanding. The financial system is gradually undertaking the implementation of the Basel Ⅱ principles and the timeline for its introduction has been extended to March 2008 for banks with foreign operations, and to March 2009 for the rest. The majority of the banks are state−owned and more efforts are necessary to liberalize the sector and foster banking consolidation. Foreign banks presence is limited at 6% of total assets but the implementation of the second phase of the Foreign Banks Road Map in 2009 will open up their participation in domestic banking investment. While the ＊５ According to the IMF (India, Selected Issues, 29 November 2006), higher income, low interest rates and financial market liberalization have caused asset markets in India to boom. However, recent rises in asset prices reflect structural rather than speculative pressures. 2007年10月 第35号 229 insurance segment is gradually being liberalized no developments have been recorded in terms of launching private pension funds that are highly demanded by the investors. Both insurance and pension funds are expected to become large consumers of government bonds and bills. The corporate bond market remains at an embryonic stage and the delay in its enhancement is partially explained by the relatively easy access of Indian firms to funds in the international market. 3．The External Sector Trade performance has benefited from trade liberalization measures, deeper integration in the world economy, and a very favorable international environment. The degree of openness (exports plus imports over GDP) has improved in recent years but remains moderate around 30% of GDP, below the country’ s potential. Exports are surging but oil−driven imports off−set the benefits of the booming sales. Major trading partners are US, UAE, China, Singapore and the UK for exports, and China, USA, Switzerland, Germany and Australia for imports. As for the traded categories chemicals, iron ore, jewelry, textiles and handicrafts are the major export products while oil and capital goods comprise most of the imports. High oil prices and strong domestic demand have worsened the trade deficit and widened the current account deficit (Chart 2). The gap is, nevertheless, comfortably financed by substantial overseas workers remittances, buoyant services and portfolio and FDI inflows, and the overall Balance of Payments is in surplus. India has built up gross international reserves over $177 billion or around 10 months of import cover that constitute an important buffer to potential crises. The Rupee is not yet fully convertible although the government is implementing the recommendations of the Tarapore Report−2 230 開発金融研究所報 towards full capital convertibility. The RBI usually intervenes when necessary to curb down appreciation pressures due to the abundant capital inflows. The real effective exchange rate has depreciated in the recent years but is beginning to show the impact of the inflationary pressures. Economic buoyancy and a more flexible investment regime have attracted larger Foreign Direct Investment (FDI) inflows that for the first time surpassed the more volatile portfolio investments during the last fiscal year. FDI surged from about $2 billion two years ago up to an estimated $10 billion in FY2006−07. The principal investors are Mauritius (non−resident Indians), US, Singapore, Netherlands and Germany, and the major recipient sectors are electric equipments, telecommunications, services and pharmaceuticals. Chart 2：Current Account Balance（% of GDP） 3 2 1 0 -1 -2 2002/03 2003/04 2004/05 2005/06 2006/07p Source: IMF A prudent borrower, India’ s foreign debt stock stands below 6% of GDP at a moderate service with one third of the stock at concessional terms, and foreign exchange reserves exceeding the debt stock by over 20%. In addition, the country holds impeccable debt records as it never defaulted or experienced trouble servicing its debt. This, together with streng thened fiscal consolidation, macroeconomic stability and growing saving rates, has lifted India’ s credit rating up to the investment level. Export and production diversity, and the relatively low exposure to the international markets, rule out vulnerabilities to single commodities’demand crisis mitigating, thus, overall external vulnerabilities. Ⅱ．THE GOVERNMENT STRATEGY. STRUCTURAL CONSTRAINTS Macroeconomic policy in India is articulated around the objectives and targets set in the 5− year annual plan. In December 2006, the Planning Commission launched the draft for the 11th Five Year Plan, which final version is to be approved by late 2007. Entitled Towards Faster and More Inclusive Growth, the document reflects the existing concerns with growing spatial inequalities and the hardship of the poor. Overall, the draft is more resourceful on measures and actions towards ‘faster growth’ than to ‘inclusive growth’ , although the government awareness is straightforwardly stated so as its willingness to balance living standards. The draft Plan accurately lists all the development bottlenecks threatening the sustainability of growth as per its GDP target (9.0%). It also identifies infrastructure investment needs in the amount of $320 billion, inviting the private sector participation through PPPs and SVPs, and higher FDI inflows. In terms of policy making, adherence to fiscal discipline is guaranteed by the Fiscal Responsibility and Budget Management Act. On monetary policy the RBI is committed to curb down inflation and control liquidity alternating increases in the interest rate and in the provisions and reserve requirements. Overall, economic reform has proceeded at a slow pace since the new government took power in 2004, but the government is making efforts to gradually improve the environment to attract foreign investors. This development has been triggered by the surge in FDI flows to the country, and the parliament is discussing a long list of measures targeting the removal of FDI caps. Moreover, SEZs legislation is currently being amended to include a legal framework to solve land disputes. There are currently 70 SEZs but the awarding process is stalled until the amendments are enacted. Privatization remains a sensitive issue in India but the largest SOEs operate de facto as private entities and do not receive budget transfers anymore. The Indian economy faces different constraints that might hinder growth in the long term. Infrastructure bottlenecks, particularly severe power shortages, stand among the main obstacles. The government has taken important initiatives in that regard and the private sector response has been positive so far. However, while prospects for the major sectors are good, progress in urban and rural development (transport, water management, sewerage, irrigation, etc) lag behind given the lesser private sector interest. Employment generation is critical in the future of populous India. Unemployment (and under−employment) is compounded by the annual large number of new entrants to the labor market. A poor education system and rigidities in the labor market lay at the core of the problem. This limitation is particularly acute in manufacturing where once the number of workers reaches 100 it is not possible to fire employees limiting, thus, scale expansion and employment generation. In addition, the lack of skilled labor is inflating salaries in the booming sectors and discouraging foreign investors (e.g. salaries in the IT sector are increasing at a rate of 30% per year). An in−depth reform in education, with emphasis on vocational training, is needed 2007年10月 第35号 231 to facilitate the transfer of the idle work force in the agriculture sector to fast growing manufacturing and services. Excessive regulation and red tape is damaging competitiveness and, hence, undermining growth. According to the 2007 World Bank Doing Business in South Asia, India ranks 134 out of 175, well below neighboring countries like Pakistan, Bangladesh and Sri Lanka. However, there are marked disparities across the states in terms of doing business efficiency with a heavy congestion in Mumbai and Delhi but with some states like Hyderabad clearly outperforming the rest. Finally, but not less important, poverty remains a true concern in India. The situation is aggravated by an appalling provision of basic public services at all levels, and widening income inequalities and regional disparities now the economy is taking off but biased towards the upper and more educated segments of the population. Ⅲ．INDIA AND CHINA. TWO WORLD GIANTS The two giants are often compared but while it is true both economies have some similarities, like for instance, market potential and population size, China and India are actually very different countries from the political, economic and social perspective. In addition, when it comes to the development approach their choices differ markedly. A detailed analysis would exceed the length and scope of this article, therefore, the purpose of this section is to highlight some of the salient features in the reformist path in both countries. Table 2 provides the reader with a snapshot view of relevant indicators in the countries. 232 開発金融研究所報 While India is known as the world largest democracy, and frequently undergoes ups and downs in the political cycle, China is ruled by an authoritarian government strictly following a unique political line that assures stability. These differences are important as they determine the pace of reform, the speed of its implementation and the way its undesired side−effects are treated. Both countries follow the gradualist approach but India proceeds at a sluggish pace due to the constraints exerted by the complexity of the parliament and the federal states. Nonetheless, an important commonality is the fact that both governments have opted to finance their development without incurring in foreign debt accumulation. There are also differences in time and nature of the reform. While China is already an experienced reformer (reform started in December 1978) India launched the first comprehensive reforms in the 90s after a shy attempt in the 80s. China, aware of the importance of agriculture in terms of food security and rural income, initiated the reform process in this sector by liberalizing prices and fostering the establishment of free markets. Positive results followed quickly with agriculture showing efficiency gains, higher productivity and, most importantly, a substantial increase in the rural per capita income that legitimated the reform and the government behind the implementation. In contrast, India chose the financial sector and licensing and trade liberalization as starting point and, so far, has not yet developed a strategy for the much needed agrarian reform. High ideological barriers had to be avoided in the Chinese Communist Party (CCP) when its paramount leader Deng Xiaoping pushed for the opening up to trade and investment, with the SEZs as a key tool to facilitate the integration of China in the world economy. The leader’ s deter- Table 2：India versus China Population (million) GDP ($ bn) Per capita GDP growth (%) GNI per capita ($) Manufacturing in GDP (%) Value added in industry (% GDP) Life expectancy (years) Adult literacy rate (%) Under 5 mortality (per 1,000) Under 5 malnutrition (%) Poverty ratio (% population) Electricity use pc (bn kwh) Goods hauled (railways) (Ton/km bn) Container traffic (ports) (millions) Air freight (Ton/km millions) Telephones (land + Mobile) (per 1,000) Merchandise exports ($ bn) Service exports ($ bn) FDI inflow ($ bn) Tourist arrivals ($ m) Forex reserves ($ bn) Year China India China to India ratio 2004 2005 1980−2004 2005 2003 2005 2004 2003 2004 1995−2003 2004 2004 2002 2003 2003 2004 2005 2005 2005 2003 2006 1,300 2,278.3 8.2 1,740 39 42 71 91 31 12.1 5 1,379 1,508.7 61.62 5,650.6 499 763 74 79 33.0 1,066 1,087 797.5 3.7 730 16 27 63 61 85 45.8 29 435 333.2 3.9 580.0 85 105 61 6 2.4 177 1.2 2.9 2.2 2.4 2.4 1.5 1.1 1.5 0.4 0.3 0.2 3.2 4.5 15.7 9.7 5.9 7.3 1.2 13.8 13.8 6.0 Source：World Development Indicators（2006） , Institute of International Finance, Economist Intelligence Unit, People’ s Bank of China, Reserve Bank of India mination proved successful and FDI flooded the country, exports boomed benefiting from the foreign know−how, and international reserves accumulated at the central bank. Nowadays, China has become a large FDI investor itself and a donor to developing countries as well. On the other hand, India, concerned about the impact of external competition, has been more reluctant to invite foreign investors. Hence, the liberalization of the external sector is limited. However, due to the lesser reliance on the external sector India has based its growth on the domestic engine reducing dependencies and vulnerabilities to exogenous factors. In sum, while the main pillar of China’ s growth strategy has been the promotion and liberalization of the external sector, India has relayed more on the strengthening of the domestic demand. Another visible difference among the two counties relates to the main source of growth from the supply side. While services is the key driver in India, China made of light manufacturing the main resort of the economic reform after the restructuring in agriculture. Absent from the Maoist period in which only heavy industry was developed, light manufacturing has led growth in China for many years. Most importantly, it has helped to efficiently employ a part of the large surplus labor from the rural areas, taking advantage of the high literacy ratio. Manufacturing in India has emphasized skill−intensive rather than labor−intensive manufacturing and the level of value added is naturally higher. Rigid labor laws as well as constraints on the scale of private enterprises have limited India’ s presence in labor−intensive manufactu- 2007年10月 第35号 233 ring, the usual specialization in a populous developing country. It should be highlighted, however, that good entrepreneurial skills have pushed some Indian private companies up to the top in international markets engaging in large mergers and acquisitions. A well known, and successful, feature in the development pattern adopted by China and other East Asian economies is the high level of gross savings and investment to GDP. Savings have been channeled to infrastructure development and the provision of social services, as well as to human capital upgrading. India is, in contrast, lagging behind in this process, although the rates of investment and savings are increasing but with insufficient resources devoted to training and education. In their respective development processes India and China are suffering from a major side effect of reform, income and regional disparities. Inequalities are more pronounced in China but the CCP has shown greater awareness. While China launched the costly Go West policy in 2000, India is now realizing the seriousness of the problem and beginning to address it. In terms of financial and banking reform India is better off than China, and has progressed more, with exemplary prudential and reserves requirements, good capital adequacy ratio and a low volume of NPLs. On the other hand, China’ s accumulation of NPLs and overall unhealthy banking system has threatened the stability of the sector more than once. However, recent advances in financial sector reform together with the impressive accumulation of international reserves are helping to mitigate risks. Both countries protect their financial systems through limited exposure to the international markets and restricted currency convertibility. India and China together account for about 234 開発金融研究所報 35% of the world population, a powerful reason to explain why development in these economies matters not only for themselves but also for the world. In spite of high GDP growth rates and the huge potential of their markets, both economies face serious structural concerns that will be the key, in the future, to the achievement of sustainable and inclusive growth. Ⅳ．THE WAY AHEAD With a population of over one billion people, the future of India generates a concern that goes beyond the national frontiers. The country’ s progressive insertion in the world economy, its energy dependency, and the large numbers of poor, exacerbates the importance of economic and social developments in India. Economic buoyancy in recent years does not suffice to disregard some of the lingering questions marks about the country’ s future, like for instance, demographics. From the economic point of view, growth appears sustainable in the medium to long term due to the strong aggregate demand, the uptrend in savings which will fuel higher investment, expected efficiency gains, the size of the current infrastructure projects, and enlarged capacity additions to match the fast growing demand. In this scenario inflationary pressures might arise but the RBI has shown strong commitment towards price stability and has proven no hesitation to intervene when required. Fiscal consolidation will proceed further, enhanced by the growth momentum and additional efforts on fiscal reform. Nevertheless, more steps into the rationalization of the expenditure side of the budget are needed to guarantee fiscal soundness given the size and scale of the investment needs that the country’ s progress demands. Oil subsidies, a sensitive issue, are the cornerstone of expenditure reform, particularly to prevent the impact of potential oil prices increases, being India highly dependent on oil imports. On the external sector, trade imbalances will widen the current account deficit albeit moderately. However, surpluses in services, abundant incoming transfers and growing FDI flows will keep the balance of payments in surplus, and the international reserves building up. Domestic and public debt stands at 58.7%, and the external debt poses no concerns at all at 5.9% of GDP and with debt service at 6.2%. Moreover, debt indicators, domestic and foreign, are on a declining trend. Under this scenario and with an average GDP growth projected around 8.5% (Table 3) prospects for the economy are good at the macroeconomic level with no concerns on debt sustainability. Upgraded to the investment level by the major international rating agencies risks are negligible in the short run. The major risk, thus, pertains to unexpected political turbulences in an eventual drastic change in government after the 2009 elections that could stall the reform process. Even though it is too early to forecast the election’ s outcome it is likely that a new co- alition will be required comprising a balance of the different involved parties’ interests. In addition, the economic take−off is solid, so as well as its fundamentals, and there is the perception that the reform process has reach a turnaround and that it is irreversible. Reform will, however, proceed at a slow pace, and structural constraints and widening income inequalities might slow down future growth if not timely addressed. Finally, it is imperative for the government to enact more determined actions to curb down poverty levels, improve social service delivery and generate employment. It is believed in India that the demographic factor will have a positive impact on the economy by expanding the labor force and its engagement in the productive process, leading to higher productivity levels and improved competitiveness in world markets. However, for the demographic factor to materialize it is crucial to substantially upgrade human capital levels, particularly in rural areas. This is also linked to the long−delayed agriculture reform, another sensitive subject demanding prompt action to alleviate the harsh subsistence conditions of 60% of the population. Table 3：Selected Economic Indicators. Projections 2006−2011 Real GDP Growth (%) CPI Inflation (%) Fiscal Balance (% GDP) External Debt (% GDP) Exports Growth (%) Imports Growth (%) International Reserves ($ m) In months of imports 2006/07 2007/08 2008/09 2009/10 2010/11 9.2 6.0 −7.0 5.9 22.6 22.8 180.0 9.3 8.6 5.5 −6.3 5.6 17.2 22.3 187.4 8.0 8.5 5.5 −5.5 5.2 17.0 17.4 194.2 7.2 8.4 5.3 −4.7 4.9 16.1 14.4 205.0 6.7 8.2 5.3 −3.8 4.6 16.9 16.0 223.2 6.3 Source：Indian authorities, CEAD staff estimates. 2007年10月 第35号 235 REFERENCES Asian Development Bank (2007), India, Oxford University Press for ADB, Manila. Asian Development Bank (2006), India, Oxford University Press for ADB, Manila. Economist Intelligence Unit (2006), India, Country Profile, 2006, London. Economist Intelligence Unit (2006), India, Country Report, November 2006, London. International Monetary Fund (2006), India, Selected Issues, November, Washington D.C. Planning Commission/Government of India (2006), Towards Faster and More Inclusive Growth. An Approach to the 11 th Five Year 236 開発金融研究所報 Plan, November, Delhi. Purfield, C. (2006), Mind the Gap−Is Economic Growth in India Leaving Some States Behind?, IMF Working Paper, International Monetary Fund, Washington D.C. Reserve Bank of India (2007), Macroeconomic and Monetary Developments. Third Quarter Review 2006−07, Mumbai. World Bank (2007), Doing Business in South Asia 2007, World Bank, Washington D.C. World Bank (2006), India. Inclusive Growth and Service Delivery: Building on India’s Success. Development Policy Review, May, World Bank, Washington D.C.
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