Manmohan outlines five challenges

Special Correspondent

Hurdles on road to economic development

- Revitalisation of the rural economy

 A regulatory culture to facilitate cost-effective private investment in infrastructure

NEW DELHI: Cautioning against complacency following the rapid progress achieved by the country, Prime Minister Manmohan Singh on Sunday outlined five major challenges that would engage India over the next decade on the road to becoming a developed economy.

Releasing the "India Rural Infrastructure Report" prepared by the National Council for Applied Economic Research (NCAER) here, Dr. Singh said: "It would be wrong to assume, as some do, that the major development challenges have been solved and that the Indian economy can now effortlessly coast towards becoming a developed country."

The Prime Minister said inflation had been contained despite a high level of public debt, and "in brief, the economic environment facing the private sector has been transformed and the results are evident."

"However, we must not be complacent," Dr. Singh said, while handing down policy prescriptions for each of the five challenges, namely, revitalisation of the rural economy; improved delivery of essential public services; improved management of urban areas; preparing the financial system for greater inclusion and increased global integration; and establishing a regulatory culture to facilitate cost-effective private investment in infrastructure.

It was heartening that the growth process that commenced with the external sector and services, had now spread to manufacturing. However, more rapid growth, he said, was required to provide hope and productive employment to the millions of young people joining the labour force each year so as to accelerate the reduction of extreme poverty.

Expressing concern over the farm sector, he said agriculture would have to be redirected to activities of higher value so that the small farmer earned a decent income. Improved rural connectivity and economic and social infrastructure would be critical necessities coupled with the removal of barriers to domestic trade, he said.

Range of models

The Prime Minister asked the States to "experiment with a range of models" for delivering basic education and health services, considering their effect on the rural poor.

Our challenge, he said, was to modernise the governance of our cities so that they can generate the resources for their own growth and attract private financing in a stable environment.

On the opening of the financial sector, Dr. Singh said extending the sector’s reach would be crucial for "permitting our small entrepreneurs and producers to realise their potential... India stands to gain hugely from greater integration of its financial system with that of the world, in a prudential way."