Slowdown is for real, it seems. Even the Prime Minister’s Economic Advisory Council has revised GDP growth target down to 7.7 per cent for 2008-09.

Let me put my views in context without looking at figures put out by others. I maintain that a deep structural reform is taking place in the growth scenario. This has happened in most transforming economies — Japan, the tiger economies and China.

I think it’s now our turn. It really started in 2005. It’s after a lot of underpinning work that was done, we liberalised, opened our economy... India Inc has put the efficiency factor into structural changes. Leading up to 2005, companies got their processes, cost and efficiency right. There has been a lot of work done by the industry to come to this stage of preparedness.

At the same time, something that has not happened elsewhere in the world has happened in India. The services sector blossomed ahead of the manufacturing sector. Globally, it happens the other way round…. first you grow through the industrialisation route and thereafter through services. In India, because of the knowledge revolution, services grew faster than the industry. Almost 60 per cent of the economy was growing at 10 per cent.

We also have large industrial investment taking place. In the history of India, we have not seen this kind of growth. The maximum we have seen is $50 to $60-billion investment. Now, we are talking of 3-4 times this — around $250 billion.

But, can we sustain this growth rate? We seem to be hitting a constraint in terms of our domestic policies.

... contd.