To reach the current American per-capita income, it will take us a little more than a century.If India were to consistently grow six percent per annum, at the current population growth, it will take her 14 years to catch up with the current living standards of China and 73 years to catch up with those of Korea. To reach the current American per-capita income, it will take us more a little more than a century. These time periods can be nearly halved by a growth rate of 10 percent. Thus, we face a staggering challenge.
A 10 percent growth rate is, of course, achievable. To convince ourselves of it, we do not need to look far. During 1950-80, India grew at an average annual growth rate of just 3.5 percent. In contrast, during the last 20 years, we have managed to register the much higher growth rate of six percent per annum. This was achieved during 1980s through acceleration of borrowing abroad accompanied by mild liberalization, especially on the external front. But such rapid accumulation of debt was not sustainable as we quickly learned from the June 1991 balance of payments crisis. Nevertheless, through moderate reforms, we not only overcame the crisis but also managed to sustain-even temporarily accelerate-the grow process during the following decade.
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