The double digit fallacy

There have been less than a score of countries in history that have grown for over a decade at an average per capita GDP growth rate of 7.1 per cent or more. The significance of this cut off (7.1 per cent) is that per capita income doubles in a decade and would become eightfold in three decades. There have also been about a dozen countries in history that have sustained a per capita growth of 6 to 7 per cent for a decade. India in 2011 was a member of this second category, but is in danger of falling out of it this year. Talk of double-digit GDP growth (8.5 per cent per capita) distracts from the challenge of maintaining per capita growth at 6 per cent-plus, not to mention the even greater one of bringing it back to the potential rate of 7 per cent (about 8.25 per cent of GDP) and sustaining it at that level for the next two decades.

The writer is non-resident senior fellow, Brookings Institution, former chief economic advisor to the Government of India, and former executive director, IMF

express@expressindia.com

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