NEW DELHI, May 12: Disheartening as it undoubtedly is, it could be well into the 22nd century before India is able to reach half the per capita income levels of advanced economies like those in the West. By contrast, countries like China will require a mere 16, Indonesia will take 25, Malaysia 8 and Thailand 11. Sri Lanka will achieve this in 46 years and, if it is any consolation, Bangladesh will take 141 years to do this. These are the findings of the World Economic Outlook released by the International Monetary Fund recently.

The findings of the report were discussed today by Flemming Larsen and Paul Falcone from the IMF's Research and External Relations Department. The findings are based on the growth rate achieved in the period 1990-95. If, however, India's GDP growth accelerates to the levels reached in the past two years in the region of 7 % annually this period would be halved, to around 70 years. In other words, the continuation of policy reforms to ensure sustainability of growth will be critical in determining the pace at which India catches up with the developed countries of the world.

The Outlook expects world growth to rebound this year with stronger growth in the US, Germany, France and the UK. The fact that transition economies like those in Central and Eastern Europe are expected to grow at 3 %, as against 0.1 % last year, is also likely to help.

Of special interest to countries like India are the projections about growth in world trade and oil prices. As against a growth of 5.6 % last year, world trade in goods and services is expected to grow by 7.3 % in volume terms this year. Prices of oil are also expected to stop spiralling as they did last year. As compared to last year's price hike of under 19 % in dollar terms (1995 growth was 8 %), this year's oil prices are estimated to fall by 3.6 % in dollar terms.

The Outlook also examines issues such as whether increased trade from labour-rich countries like China and India reduces jobs in the developed world; whether increased integration of the world capital markets actually restricts the autonomy of central governments; and whether the success of certain emerging economies effectively precluded others from developing so fast. The data on these issues, according to the IMF officials, indicated that none of the above were true. The fears on the issue of labour-intensive exports from China and India, it would be recalled, are among the many raised by advanced countries while advocating sanctions against imports from developing countries.

The IMF officials also announced that the IMF was trying to amend its statute so that it could also examine matters relating to capital account convertibility as against just current account convertibility as at present. The matter is likely to figure in the annual meeting in Hong Kong in September. The officials pointed out that this did not mean that the IMF would be recommending that countries go in for capital account convertibility. On whether India should go in for full rupee convertibility officials pointed out that it would be simplistic to make such a recommendation just on the basis of high forex reserves.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.