The World Bank on Tuesday said that India could achieve eight per cent economic growth, provided the government stepped up reforms, including measures to contain fiscal deficit and wasteful subsidies.
"Eight per cent growth is achievable. But India needs to address its fiscal deficit, hike investment in infrastructure and carry out major policy changes to make capital more productive," World Bank chief economist (South Asia region), Shantayanan Devarajan said at a press meet in New Delhi.
The country recorded a GDP growth of 8.4 per cent during the second quarter of this fiscal and over 7 per cent in April-September last year.
The ministry of finance, Reserve Bank of India and research agencies like NCAER, RIS and Crisil have projected over 7 per cent growth in GDP this fiscal.
Devarajan said the South Asia region might grow by 6-7 per cent this fiscal compared to about 5 per cent in 2002-03.
"If India gets to 8 per cent GDP growth mark, other countries in the region will also grow by 1 per cent higher," he said.
The World Bank economists said subsidies needed to be better targeted towards the poor, and delivery of education, health and other social services needed to be improved to benefit the weaker sections of the society.
Devarajan said the government also needed to improve infrastructure and ensure imposition of user charges.
Asked how the government should address the problem of fiscal deficit while improving social services and infrastructure, Devarajan said, "It's not about more money to social sector. We have to strengthen service delivery before increasing the funding."
"Most subsidies are going to the non-poor. Failing service delivery has resulted in a situation where poor are looking towards the private sector for various social services," he said.
While endorsing the fact that India has been able to reduce poverty levels, the World Bank official indicated that higher growth would lead to further reduction in poverty.
On the recent measures to promote South Asian Free Trade Agreement, Devarajan said, "It is an important step, especially when you have a bigger nation like India. The smaller countries are likely to benefit from the agreement."
"It's a signal that the level of hostility will subside and (it will) promote trade and investment in the region," he added.