"It should pay attention to economic reforms and infrastructure"
MANILA: India could achieve its target of reaching 10 per cent growth provided it paid attention to economic reforms and building infrastructure, Asian Development Bank (ADB) president Haruhiko Kuroda has said.
Robust growth
Over the last several years, India had registered "robust growth" and in terms of growth rate in the Asian region, was next only to China, Mr. Kuroda said. The Indian economy was also contributing to the rapid development of economies in Asia. However, for the economy to grow at 10 per cent at last two conditions would have to be met: "Continue economic reform and strengthen infrastructure." "For India to grow, infrastructure is very important. That means roads, railroads, power generation, communication networks and local infrastructure need to be upgraded," Mr. Kuroda said.
He added that it was essential that economic reform, already set apace, must be continued and accelerated. "Deregulation and concessions are appropriate, but there must be further reform for the economy to grow."
Mr. Kuroda, who is also the chairperson of ADB’s Board of Directors, has served as Special Adviser in the Cabinet of Japanese Prime Minister Junichiro Koizumi. He was in India recently to oversee arrangements for the Bank’s 39th annual meeting to be held in May in Hyderabad. The agenda of the meeting, he said, would be to focus on two areas: prospects of Asian economic development and the Bank’s technical assistance to its various member nations.
"We are a development bank and are, therefore, particularly interested in how economies in the region are developing," he told a delegation of visiting Indian journalists in Manila, on Thursday. This also translates into a keen interest in equitable development and poverty reduction. "Growth is necessary, but not sufficient for poverty reduction. We must have sustained growth to reduce poverty. This means investment in the social sectors - human capital and healthcare. Good governance is a prerogative for poverty reduction."
Globalisation
Veering onto a discussion about the negative impact of globalisation on some sectors of the economy, Mr. Kuroda admitted that in the short term, due to intense competition, certain sectors, individuals or companies might be affected. "However, I am very optimistic that in the long run, almost all stake holders will gain from the increased trade that globalisation brings."
In the medium to long run, the economy would adjust itself to globalisation, Mr. Kuroda said. He also made it clear that governments must intervene to provide assistance to those sectors, regions or companies affected initially by the globalisation phenomenon. During his recent trip to Beijing, Mr. Kuroda said, Chinese economists had expressed concerns about inequitable income levels in China. The country’s new five-year plan hopes to set right these inequalities by focusing on rural areas. "The main objective is to realise more inclusive, equitable growth."
Common currency
Responding to a question on the possibility of a common currency for Asia, the ADB president said though he was in favour of such a move, it would at best be a `long-run possibility.’
He suggested that it would be better to focus on a few immediate steps, including improving connectivity in the region, encouraging financial co-operation, establishing consistent free trade agreements and working together to avoid serious natural disasters and epidemics that the region is prone to. Ten ASEAN countries had already agreed to establish FTA zones in their own nations and accelerate trade co-operation among themselves. " These economies are complementary to each other. If India has Information Technology, China has the manufacturing sector, Japan has capital goods and Korea, electronics. Clearly, the dependence among the economies is growing," he explained.
For common market
In his view, it is realistic that Asia first develops a common market, an economic community before envisaging common currency. It will take time, but it also requires substantial effort by the countries to reduce trade barriers and harmonise customs clearances and domestic regulations.
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