Economic Growth and Development in India and SAARC Countries

Momentum of economic growth in India and other South Asian economies is analysed based on stylized facts of these economies along with trends of their fiscal, monetary, trade, education and income distribution policies. Macroeconomic, general equilibrium, trade and game theoretic models have been identified that could be applied to analyse micro, macro and sectoral issues of economic growth. Achieving higher rates of economic growth requires more systematic and scientific analysis of potentials, existing strengths and comparative advantages of these economies so that they can march ahead in the growth competition in the global economy. Policies should be consistent and comprehensive to link various sectors, regions and nations in this road for long run growth. A strong pro-growth government in India with a good vision for the regional integration and development is instrumental in turning this region as another example of economic miracles in the global economy within the next few decades. By maintaining average 8 percent growth, it is possible that India will catch up the countries in the Western Europe in per capita income within a generation. Other SAARC members may be able to converge to India in per-capita income if they are able to become more stable and ready to march single-minded on the highway of economic growth. Keywords: Growth, economic development, South Asia, China, India, JEL classification: O2, O4, O53 Dynamic CGE and Econometric Analysis hese are as follows: 1.Given the 20 percent population residing in South Asia this region should push for growth and increase its share of global GDP up to 20 percent from roughly 6.5 percent in 2014. 2.Such growth requires increasing the ratio of saving and investment about 10 percent above the current averages around 35 percent. 3.Process of structural transformation should continue so that output and employment increases substantially in industrial and services sectors and till both output and employment in the agriculture sector are less than 5 percent from around 17 and 50 percent in recent years. 4.Such transformation will occur as this region moves towards urbanisation so than about 90 percent of the population starts living in urban area with facilities. Building mega cities like this will create not only employment but also income. It also will gradually free up rural lands for more scientific cultivations and other meaningful economic uses. 5.On manpower issues it is important to reduce the student teacher ratio from 40 to close to 16 to raise the quality of education and cognitive skill among children. This is essential for human capital required for science and technology and for improving the PISA scores. 6.Revenue and spending of government should balance at least in the medium term and debt to GDP ratio should not increase over 50 percent of GDP; the size of the public sector is not over 30 percent of GDP. 7.Trade ratio should increase to around 100 percent from the 50 percent at this time. Free trade regimes can enhance both the supply and demand side of the economy. 8.Liquidity of the financial system need at least to treble to have a smooth flow of credits required for new and existing enterprises. 9.Free convertibility of currency is essential to protect this region from international shocks. 10.A high 8 percent growth strategy is consistent with all above and requires firm commitment, efficient and strong public administration. Gini coefficient should not be above 35 percent for social integrity and cohesion.