Among the constraints to sustainability of high growth and poverty reduction in India, three are most apparent.

First, India’s infrastructure is in urgent need of repair and expansion. Huge amounts need to be invested in ports, power generation and distribution, telecommunication, railways, roads and bridges, irrigation systems and water resources, infrastructure in urban and rural settlements, and afforestation and rehabilitation of degraded land.

Second, the quality of India’s human resources is abysmally poor. India has the highest number of illiterate people among all countries. A third of India’s children between the ages of six and ten do not get to school. Of the children that do, a good number drop out well before they acquire the skills needed to earn a decent wage. India has also the world’s largest share of children who remain malnourished. A large proportion of the Indian popula­tion does not have access to basic health-care or basics like drinking water, shelter and toilets. Communicable diseases and prenatal and maternal morta­ity cause about 470 deaths per 100,000 persons in India — a rate four times that of China. In sum, a third of all Indians are poor, malnourished, illiterate and in bad health, and a robust growth rate of population only adds more to the bottom third of the Indian people. In a country like India, reduction in population growth becomes a crucial variable. Experience of some Indian States clearly suggests that a fall in population growth rate has strong link­ages with social indicators like health and literacy, particularly of women.

Third, the government needs to redefine itself both in terms of what it should do and what it must spend on. While deregulation has already reduced the role of government in industry, infrastructure and services, and has expanded the space for the private sector, much more needs to be done. The process of privatisation remains tardy. But deregulation and privatis­ation alone will not help. This is because high fiscal deficits continue to threaten the sustainability of the growth process. Huge borrowings by the government hamper resource mobilisation by the private sector and keep interest rates high. It follows that redefinition of government is closely linked with fiscal reform, especially reduction of the deficit and re-orientation of expenditure.