1887

Executive summary

The Indian economy has been catching up quickly in the past two decades, and weathered the global recession well, with only a limited and short-lived slowdown. In just over 11 years, income per capita has doubled. Wide-ranging reforms and increased investment have lifted potential growth to almost 9%, the highest in Indian history, helped by improvements in infrastructure. Inclusive growth of 10% per year is feasible given that demographic developments are set to push up saving, but will only be achieved if the administrative and regulatory barriers facing companies are reduced. In addition, the government should step up efforts to restructure public expenditure; reduce the fiscal deficit; relax some of the constraints facing the financial sector and further promote international integration. In the near term, the authorities need to remain vigilant against the risks of high inflation and volatile capital flows.

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