1. Shashank Bhide NCAER 15 September 2010 Sustaining India’s growth

2. The long-term story Half full glass: - 20 year growth 7% (R-S) - 10% Kelkar - 5.5% (50 years) Goldman Sachs Half-empty glass: - Low Saving/Investment; Government Dis-saving - Inability to use labour productively - Services cannot outgrow manufacturing forever - Agriculture, infrastructure, regional disparities.

3. The makers and the breakers of growth The drivers –Demography –Aspiring middle class –Good institutions –Low base of productivity –High TFP growth The breakers –Fiscal pressures –Rising inequality –Rising regional disparity –Slow reforms –Poor governance –Fragile environment

4. Sustainability framework The triggers of unsustainabilityThe safety valves The macro scene Fiscal imbalanceThe fiscal space/ reforms Current account imbalanceForex reserves Private debtDiversification of markets Capital marketsGood regulators InflationPDS The oil priceForex reserves; fiscal space Bad monsoonFood reserves Inequality measures Poverty HCRPDS/ employment guarantee Median incomeProductivity growth Regional disparityFinance Commission Productivity measures Real wage ratesInvestment; Social sector spending Capital/ output ratioInfrastructure;Trade openness; competition

5. The crude price shocks: $/barrel

6. World output: % YOY

7. GDP growth patterns (%YOY) Source: IMF WEOs

8. Non-agricultural GDP growth: % YOY

9. Accelerating GDP growth: %YOY (10 year moving average)

10. Threats to sustainability of high growth Fiscal sustainability Weak social safety nets Inadequate investments in human resources Environmental sustainability