The Eight Per Cent Solution

Book excerpt: IT IS A WONDERFUL STORY, but time after time in the decades since Independence, it stops short midway. India is poised for growth. The GDP is rising. The lumbering elephant is turning into a tiger. But the leap doesn't quite happen. There has been enormous change, but alongside the problems have also been rising. And for a large mass of people, it remains a future of brutal poverty. If India is to meet the needs of its people, it has to consistently generate enough jobs for the millions of youth who enter the job market every year, and build up an infrastructure in which there is enough to go round for education, health and security of its population. Nikhil Gupta, chief economist with a leading brokerage, has been a close observer of the policies and factors that help India grow. As he puts it, an economy consists of four participants-households, corporate, government and external-and just three activities: consumption, savings/investment and external trade. However, the lack of attention to the finances of the household sector and the unlisted corporate sector is shocking. As too the gap between the real and the financial economy. It is these and other gaps in this complicated scenario that Gupta tries to bridge. The Eight per cent Solution presents Gupta's version of a grand unified theory that brings in the neglected but important elements to show how India can finally achieve that elusive target of a higher phase of growth.