Is India’s High Growth Sustainable?

Over the past four years India’s economic growth has continued to exceed expectations, surging ahead at an annual rate of more than 8 percent. Additionally, India’s recent five-year plan predicts that over 9 percent annual growth will be achieved in the coming years. The dividends have been notable in terms of declines in poverty and increases in living standards. Yet there are concerns that India may be overheating, with consumer prices, asset prices, and wages all rising; capacity utilization at high levels; and skill shortages developing. What are the real prospects for India’s economy, and can growth continue in a balanced and sustainable way?

On March 8, Brookings Global Economy and Development and the International Monetary Fund (IMF) hosted a panel discussion on India’s economy. Participants included Charles F. Kramer, chief of the IMF’s division that covers India; Shantayanan Devarajan, chief economist of the World Bank’s Human Development Network, South Asia Region, and editor of the World Bank Research Observer; and Nirvikar Singh, director of the Business Management Economics program and co-director of the Center for Global, International and Regional Studies at the University of California at Santa Cruz. Lael Brainard, vice president and director of Global Economy and Development, moderated the discussion.