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"The biggest challenge facing the Indian economy is that of fundamental transformation which can raise the GDP growth to a sustainable 8 per cent annually. I believe that that is the only way to solve the basic issues of unemployment, poverty and social conflicts. My suggestion to achieve this fundamental transformation is seven-fold. We seem to have made good progress on two of them — telecommunication and roads. Let me mention the other five.

First and the most fundamental in my view is primary education. We still have 50 million children in the age group 6-14 who are out of school. Dropout rates are 42 per cent at Standards 1-4 and as high as 58 per cent at Standards 5-8. Education helps people in formed choices and enhances their access to opportunities.

Second, and which goes hand in hand with primary education is the issue of primary healthcare. Our infant mortality rate is 70 per thousand compared to less than 10 per thousand in the developed world. Morbidity, combined with illiteracy, deprives millions of our people from participating in the economic opportunity. Both, lack of economic opportunities and access to them, are cited as the basic reason for escalation of social strife in recent times. While primary education and healthcare improve the accessibility, we need to do much more to grow the size of the economic opportunities.

Investment in Road and Telecom infrastructure is generating huge employment opportunities, apart from enhancing productivity levels in the economy.

There are three other sectors that need immediate attention. Power sector is by far the biggest resource drain in the economy. We need to bring in `user charge', eliminate power thefts/leaks and improve efficiency of generation, distribution and transmission. Privatisation seems to be the only answer to bring about these changes. These changes can have a major impact on the fiscal deficit of the States, apart from bringing down the cost of doing business in India.

The resources saved from power sector need to be deployed for water management. Water scarcity is being felt across the country — whether urban or rural. Less than 40 per cent of the cultivable land is under assured irrigation. Underground water table is declining at the rate of 5 per cent every year. In the medium term, water shortage will create a significant barrier to growth — whether agriculture, industry or urban infrastructure. Investment in water management can generate enormous employment.

Lastly, we need to overhaul our land related laws, taxation and information systems. It is estimated that 90 per cent of land in India is subject to legal disputes over the ownership. Stamp duty ranges between 8 and15 percent of the property value, encouraging avoidance. Property tax rates are low and collection is inefficient.

All this has led to Indian land prices being the highest among the Asian nations relative to average incomes, and low tax collection for the governments hampering their ability to maintain urban infrastructure. Effective land reforms can really boost housing and retail sectors, two of the largest sectors of the economy outside of agriculture, and generate huge employment opportunities.

To summarise, the challenge of the sustained high economic growth can be overcome only providing effective primary education and healthcare reforming the power sector, investing in water management and carrying out land reforms."

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