World Bank is optimistic that the Indian economy can grow by 6-8 per cent in the coming years but has asked the government to improve social services like education and health.
"In comparison to most industrialised nations, India is likely to achieve an impressive growth as the potential is enormous. The GDP growth could be much higher at 6-8 per cent," World Bank country director Michael Carter said, but added it would depend crucially on external economy, state of the capital markets, and global trade.
The GDP growth would also depend on how the country addresses domestic economic factors including fiscal consolidation and improvement in social services, Carter said at a seminar organised by the Oxford Cambridge Society of India, in New Delhi on Thursday night.
Former chief economic advisor to finance ministry, Shankar Acharya, said India's GDP growth averaged 4.6 per cent in the last 35 years compared to over 8 per cent attained by Botswana, China, Singapore, Korea and other East Asian economies.
He said the country required higher growth in manufacturing sector to attain 8 per cent growth as it was observed in other fast growing economies.
Acharya also stressed on fiscal consolidation through reduction in fiscal and revenue deficits.
Expressing concern at the wasteful public expenditures, Carter said lots of money coming through subsidised power is being misused.
Citing an example of a village getting subsidised power, Carter said while farmers boosted their incomes through better irrigation that could be achieved through pumps receiving free power supply, the damage to the environment was substantial as the ground water level fell by 50 metres.
Many of the villages do not have a health centre within walking distance while schools are devoid of teachers, he observed.
Although poverty in the country has fallen by about 26 per cent, it was still high. "Poverty level falling to 15 per cent in the next 16 years is feasible," he said.
Citing a recent Goldman Sachs report on India, Oxford Cambridge Society secretary Surat Singh said India would be third most important economic power in the next 50 years after the United States and China.
While GDP of the US would be in the range of $45 trillion, it would be $35 trillion for China and $28 trillion for India.
While most of the advanced economies would have shortage of labour, India would be surplus with 47 million labour force by 2020.
Acharya pointed to demographic factors and said most of the surplus labour would be in poor states like Uttar Pradesh, Madhya Pradesh and Bihar.