Poor rich` India becoming rich: FM

Washington, Oct 20

India is making efforts to turn "a poor rich country" into an economic powerhouse and make the country rich with an open polity and an open economy, says Finance Minister Shri P Chidambaram. Relating what he called the "story of a poor rich country" at the Harvard University - he had done MBA from Harvard Law School - the minister said he has faith in the future generations as "more and more Indians - especially young Indians - have discovered the virtues of an open polity and an open economy."

"Our effort is to turn India into an economic powerhouse and make India rich," he said in a South Asia Initiative Harish C Mahindra 2007 lecture on "Poor Rich Countries: The Challenges of Development" in Boston Thursday. "While my generation which spearheaded the crossover will do its best, I have faith that the next generation of Indians, and the generation after that, will eliminate the scourge of poverty and make India rich. Then, the poor rich country would have deserved its inheritance."

Giving a long list of things that make India rich and poor at the same time, Shri Chidambaram said, "India is rich because of its natural resources; it is poor because it is unable to exploit those resources efficiently and profitably."

"India is rich because of its native entrepreneurial talent; it is poor because many policy and procedural hurdles stand in the way of the entrepreneurs. ... India is rich because its people are hardworking, resilient and pragmatic; it is poor because often commonsense is devoured by ideology."

"Undoubtedly, India is challenged" with the government facing the challenge of leveraging the huge natural and human resources to ensure rapid economic growth, he said describing growth as "the best antidote to poverty". "With growth, we have a chance to wipe out the stigma of abject poverty, and our people can enjoy the advantages of being citizens of an increasingly prosperous country. Without growth, India will remain a poor rich nation," Shri Chidambaram said.

For well over three decades after independence, India adopted a dirigiste model of economic development. The State was the principal driver of the economy and the economy itself remained closed to the rest of the world. India’s GDP grew at an average rate of 3.5% in those "lost decades", he said recalling that it required a balance of payments crisis in 1991 to jolt India out of its slumber. Then "brushing aside the predictions of doom, the people embraced the new paradigm of an open and competitive economy."

"The India story had begun. It is an unfolding saga and we have added many chapters, but it was not easy in the 1990s and it is not easy now either," Shri Chidambaram said describing the first decade of the new millennium as "the best since independence".

In the seven years beginning 2000-01, India`s GDP has grown at an average rate of 6.9%. Since 2003-04, the growth rate has moved to a higher plane and the average has been 8.6%. 2006-07 was a splendid year with the GDP recording a growth of 9.4%. One would have thought that the challenge of development - in a democracy - will become less formidable as the economy cruises on a high growth path, Shri Chidambaram said.