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BoP, Pakistan to hurt India's economic growth: EIU report
By agencies
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Tuesday, 14 June 2005, 19:30 IST
NEW DELHI: Pointing to some forces that could act as a drag on India's economic reforms, Economist Intelligence unit (EIU) has said any occurrence of balance of payment crisis and standoff with Pakistan may adversely impact ability to meet external obligations.
The reforms introduced in the early 90s are likely to continue, regardless of change in government-an ever-present threat. There are two obvious negative scenarios, however, that could affect the reform process, EIU said in its report "Business2010 in India."
The first was another economic crisis, like the balance-of-payments crisis that triggered the earlier reform process, it said.
The second is another standoff with Pakistan, although bilateral relations are currently good. This could quickly lead to capital flight, weakening the currency and so making it harder for India to meet its external obligations, it said.
On the government's economic policies, EIU said "the government's recognition that infrastructure needs to be overhauled and India's growing integration with the global economy will contribute to a robust growth rate."
It said the rising productivity in some industries, lower industrial tariffs, the resulting lower input costs and greater foreign investor interest are other positive factors.
The services sector would continue to grow and continue to fuel economic growth while some sectors would compete globally to employ more and bring in wealth to India, it added.