India : recent developments and medium-term issues.

This report analyzes India's recent economic performance and, after summarizing the demographic background, considers the key issues in agriculture, manufacturing, energy and power, and health and education. Chapter 1 indicates that judicious government policy has helped the economy to withstand the impact of the major 1987 drought. Export growth has improved, reducing the balance of payments impact of the drought. Some improvement was made in government finances but the deficit remains high. The Mid Term Appraisal of the 7th Plan suggests the need for at least the 5 p.a. growth rate targeted in the Plan, in order to provide a satisfactory increase in per capita income, absorb the growing labor force productively and reduce poverty. entail improvement in agriculture's recent performance; mainten This will ance of the current momentum in manufacturing and power; devel opment of new energy sources and greater energy conservation; and improvements in the coverage, efficiency, and delivery of social services. As discussed in Chapter 2, there are a number of key issues specific to each sector but two common themes emerge: the need for greater efficiency in light of resource constraints and India's already high investment rate, and the possibility of encouraging efficiency through incentives--prices, taxes, subsidies, and cost recovery--which in some cases will also generate additional resources. Chapter 3 analyses India's prospects. It suggests that continued export growth will be needed, along with significant increases in concessional assistance to support high rates of growth and reduce poverty within the context of balance of payments equilibrium.