India has the potential to grow at 9 per cent for a decade and 8 per cent in subsequent years if the country takes bold reform measures, eminent economist and Harvard University professor Lawrence Summers said today.
"Except India, major emerging economies seem to be losing momentum... I think if India maximises its potential, it could grow at 9 per cent for a decade, and 8 per cent a decade after that, and 7.5 per cent for a decade after that," Summers said during a session at the Hindustan Times Leadership Summit.
Summers, who is president Emeritus and Charles W Eliot professor at Harvard University said he is very optimistic about the capacity of India but the country needs bolder reforms.
"... 9 per cent growth, decline by 0.5 per cent to 1 per cent every decade, that is my sense about India's potential that is not my forecast for India because India would have to reform more boldly and take a whole set of steps not just at the national level but at the level of states, and even at the level of culture if it wants to achieve that potential," he said.
Quoting IMF, Summers said India is projected to be the fastest growing economy in the world over next 5 years.
Summers' statement assumes significance as India's economy grew at 7.4 per cent during July-September this fiscal year, more than China's growth rate at 6.9 per cent.
Summers, who was also US Treasury Secretary, said India should not blindly follow the so called Tiger's economies growth model and it should give more stress in developing its services sector.
"I think India can do lot to promote manufacturing. But I don't think it is reasonable to think India should follow South Korea's export-led growth model.
"India has different potential and it should concentrate more on services sector," he said.
Summers also stressed on the need of speedier and predictable decision-making in India.
"Speedy decision-making has never been an Indian hallmark. There is still too much of sense in India, that being well-connected is particularly very important in the country. If this can be worked on, nothing like it," Summers said.
Asked whether the US Fed should raise interest rates, he said, "It is very clear. Given the current context, there isn't any other alternative to raising interest rates," he said.
