Is 8 per cent gross domestic product growth a dream or possibility?
Though Indian business leaders overwhelmingly vote in favour of big growth, they are unwilling to lay bets on when the country can touch that figure.
They say there are many problems that India needs to tackle before it can touch the 8 per cent growth mark, the key being: poverty, lack of investment in research & development, bad governance and need for reforms in the agricultural sector.
While economic reforms will help the economy grow faster and the wealth creation will ultimately trickle down, reforms are currently being viewed by a major section of the political class as anti-poor.
Rahul Bajaj, Chairman and Managing Director, Bajaj Auto Limited, says this needs to change. Along with Dr R Chidambaram, Principal Scientific Advisor, Government of India, and Dr Ashok Ganguly, Chairman, ICICI OneSource, Bajaj was at a conference organized by the Confederation of Indian Industries in Mumbai to debate on how India can grow in 'turbulent times.'
According to the panelists, reforms are also the only way to tackle poverty in India. An estimated 400 million Indians live on less than $1 a day. Poverty remains India's biggest problem and tackling it is essential for India's growth.
"Reforms are pro-poor because they facilitate wealth creation. Our politicians should have the conviction to say this. Reforms are the only way to help our economy grow at 8-10 per cent that is needed and that is the only way more jobs will be created," says Bajaj.
But reforms are hampered by poor governance, which remains one of the biggest bottlenecks that India faces on the roadmap towards prosperity.
India's rising fiscal deficit and inability to curtail subsidies have earned it a few downgrades from international rating agencies.
Over the last few years, attempts made by finance ministers to curb the non-merit subsidies have run into rough weather. Former finance minister Yashwant Sinha, was dubbed the 'rollback' minister because he had to rollback subsidies of products like urea, diesel and LPG.
In this year's Budget, Finance Minister Jaswant Singh was forced to rollback the removal of urea subsidy that was announced initially.
Bajaj says that the government needs to show conviction in its ideas and remain firm in spite of opposition.
"In private discussions with the industry, the government admits that if it could only curb non-merit subsidies and the fiscal deficit the economy would get a big boost. But take urea subsidies. Everyone, including the government, knows that the subsidy helps only the industry and not the poor farmer. What is now happening with VAT is shameful," he says.
He suggests that the country look to curtail fiscal deficit, reduce losses in public sector units, implement power reforms and phase out non-merit subsidies.
Despite the emphasis on industrial reforms, there can be no neglecting the agricultural sector though.
Even as India's services industry continues to show robust growth, the agricultural sector has been unable to keep pace. The high dependence of the economy on agriculture is also puzzling, say India's thinkers.
"Three per cent of Americans produce all the food that they need. Then why should 66 per cent of Indians do the same?" asks Dr R Chidambaram.
While agriculture occupies a strategic position in the Indian economy, it is undeniable that it is only primary agriculture that is being largely indulged in. India's agricultural community is yet to take to food processing, horticulture and other value-added aspects of basic agriculture in a big way.
"India should have just 25 per cent of its people producing food. The rest in that sector can be working on value-addition to that food production," suggests Dr Ganguly, Chairman, ICICIOneSource.
However, all this does not take away from the optimism that the industry continues to reflect.
"I am optimistic about India and the Indian economy. Maybe we cannot reach this target in another year or so, but we are definitely heading in the right direction," says Ashok Soota, President, CII.
Seconding that opinion are Bajaj, Dr Chidambaram and Dr Ganguly.
"Eight per cent growth is achievable and doable. The future of our country is in our hands and it is up to us to make it happen," says Bajaj.
