Indian Economy in the Next Five Years: Key Issues and Challenges, 2005-2009

During the post independence era, India was well known as an agrarian economy with a weak industrial base, very low level of employment opportunities and serious regional imbalances. The public sector was forced to play a dominant role in developing the economy because the private sector neither had the necessary resources nor the will to undertake risks involved in large investments with long term perspective.For the first time since the introduction of economic reforms a decade ago, India posted a growth rate of 8.2 percent, which is seen as a significant achievement for economy. Needless to say, it took almost 40 odd years for India to transform from the Hindu rate of growth of 3 percent to almost 6 percent per fiscal. Several economists strongly believe that India must aim at a growth rate of over 8 percent every year and most important it should be able to sustain this growth rate consistently for at least another decade. If India can achieve a growth rate of over 8 percent every year consistently for the next two decades, by 2025 India could grow as high as US economy today. The present paper focuses on examining the prospects of Indian economy in the next five years. Further, the paper also lays emphasis on five key challenging issues that India needs to counter if it aspires to become one of the economic super powers in the world.