India is poised to become the world's third-largest economy by 2020, three decades before the Goldman Sachs estimate, said K C Pant in Hyderabad on Wednesday.
In his keynote address at the Tenth Partnership Summit organised by the Confederation of Indian Industry, Pant said a recent study by Goldman Sachs on the growth prospects of four leading developing and transition economies -- Brazil, Russia, India and China (collectively termed as BRICs) -- had predicted that India would be the third largest economy in the world by 2050, after China and the United States.
The study forecast that India would grow more or less steadily at 5.5 to 6 per cent per annum and would continue this trajectory even beyond 2050, when all the other major countries would have slowed down to a 3 per cent or less growth rate.
"Though our past performance and the prognoses for the future are a source of pride for us, we do not think that they should be a cause for complacency. India's Tenth Five-Year Plan, which spans 2002 to 2007, aims to make India the fastest-growing economy in the world by the end of this period," he said.
"We believe that the country has the potential to record an average growth rate of 8 per cent per annum during these five years, rising to above 9 per cent in the terminal year," he added.
"Our optimism appears to have been vindicated by the recent performance of the economy. In the second quarter of this year, our GDP (gross domestic product) has increased by 8.4 per cent, and it is expected to grow at over 9 per cent in the next two quarters," he said.
"The most heartening feature of this growth has been the performance of our brick and mortar sectors, which have demonstrated a high degree of vitality that gives us the confidence about the future," Pant said.
He said that India had been one of the 10 fastest-growing economies in the world in the last two decades and the future may be even better than the past.
In the past, economic infrastructure, such as railways, ports, national roads and power were all provided exclusively by the public sector. "In the future, we see these areas being opened up to the private sector to the extent that the private sector displays its willingness, but this varies from sector to sector -- a fact that we need to keep in mind," he noted.
Referring to the financial sector, he said that foreign portfolio investors have recognised the strength and potential of the Indian capital markets and have poured in over $7 billion last year.
"Although India's presence has improved significantly in the international investors' radar screen in recent years, there is still a long way to go before it can be taken for granted. This is especially true for a number of sectors in which India's requirements may be at variance with international investor perceptions," he explained.
Pant said that the Planning Commission had set up a high-level Steering Group on Foreign Direct Investment and its report was presently under active consideration of the Union government.
An empowered committee, consisting of Union ministers and state chief ministers, was also set up to draw up a blueprint for creating an investor-friendly environment and to oversee its implementation.
"This is the first time that a major reforms programme will explicitly reflect the federal nature of our political system and will be guided at the highest political level," he pointed out.
