10 Biggest Challenges for India

From Goldman Sachs Economics paper: http://www.prathamusa.org/dnn/Portals/0/dnndocuments/Goldman%20Sachs_10%20challenges%20for%20India.pdf

Future blogs will analyze and present solutions to these challenges.

1. Improve governance. Without better governance, delivery systems andeffective implementation, India will find it difficult to educate its citizens, build its infrastructure, increase agricultural productivity and ensure that the fruits of economic growth are well established.

2. Raise educational achievement. Among more micro factors, raisingIndia’s educational achievement is a major requirement to help achieve the nation’s potential. According to our basic indicators, a vast number ofIndia’s young people receive no (or only the most basic) education. A majoreffort to boost basic education is needed. A number of initiatives, such as a continued expansion of Pratham and the introduction of Teach First, for example, should be pursued.

3. Increase quality and quantity of universities. At the other end of the spectrum, India should also have a more defined plan to raise the numberand the quality of top universities.

4. Control inflation. Although India has not suffered particularly fromdramatic inflation, it is currently experiencing a rise in inflation similar tothat seen in a number of emerging economies. We think a formal adoptionof Inflation Targeting would be a very sensible move to help India persuadeits huge population of the (permanent) benefits of price stability.

5. Introduce a credible fiscal policy. We also believe that India shouldintroduce a more credible medium-term plan for fiscal policy. Targeting low and stable inflation is not easy if fiscal policy is poorly maintained. Wethink it would be helpful to develop some ‘rules’ for spending over cycles.

6. Liberalise financial markets. To improve further the macro variableswithin the GES framework, we believe further liberalisation of Indianfinancial markets is necessary.

7. Increase trade with neighbours. In terms of international trade, India continues to be much less ‘open’ than many of its other large emergingnation colleagues, especially China. Given the significant number of nationswith large populations on its borders, we would recommend that India targeta major increase in trade with China, Pakistan and Bangladesh.

8. Increase agricultural productivity. Agriculture, especially in these timesof rising prices, should be a great opportunity for India. Better specific anddefined plans for increasing productivity in agriculture are essential, and could allow India to benefit from the BRIC-related global thirst for better-quality food.

9. Improve infrastructure. Focus on infrastructure in India is legendary, andtales of woe abound. Improvements are taking place, as any foreignbusiness visitor will be aware, but the need for more is paramount. Without such improvement, development will be limited.

10.Improve Environmental Quality. The final area where greater reforms areneeded is the environment. Achieving greater energy efficiencies and boosting the cleanliness of energy and water usage would increase the likelihood of a sustainable stronger growth path for India.