Leveraging knowledge, India now a $1 trillion economic powerhouse

When Jack Welch, former chief of General Electric, the world's second largest company, said a few years ago that "India is a developed country as far as intellectual capital is concerned", it was time to sit up and take notice.

Welch made his remarks at the beginning of the new millennium when he was still at the helm of General Electric. Seven years down the line, India has overshot expectations to clock several consecutive years of high-speed growth.

Now, as India enters its 62nd year of independence, the country is well on the path to leveraging this intellectual capital and transforming itself into a global knowledge economy powerhouse - having already clocked $1 trillion in gross domestic product (GDP) during 2006-07.

"I am happy to say India has experienced vigorous growth at an average of 8.8 percent per year for the past four years," Prime Minister Manmohan Singh told the 15th Summit of the South Asian Association for Regional Cooperation (SAARC) - the eight-nation South Asian regional forum - in Colombo earlier this month.

India is also well on its way to fulfilling the projections made by the world's top investment bank Goldman Sachs that it will emerge as the third largest economy in two decades and the world's second largest economy by 2050, behind China but exceeding the US.

Even the otherwise conservative head of India's central bank, Reserve Bank of India Governor Y.V. Reddy, while moderating India's economic growth projection for the current fiscal, said the pace of growth would remain fast by any global standard.

"We continue to remain the second-fastest growing economy in the world," Reddy said, while reviewing the performance of the Indian economy and the central bank's monetary policy earlier this month.

Over the past 17 years, since India embarked on the path of economic reforms, there have been six governments and five prime ministers, but the economy has moved in just direction - a sustained eight-percent-plus economic growth.

There are other facets of India as well that speak volumes about its resurgence as a growing and emerging economy between 1990 and now.

-GDP grew from Rs.5,150 billion to Rs.42,830 billion ($1.7 trillion)

-GDP growth expanded from 4.9 percent to 9.1 percent.

-Per capita income almost doubled from $390 to $740.

-Foreign exchange reserves jumped from barely $1 billion to $310 billion.

-Inflows from foreign funds rose from $1 million to over $60 billion.

-Foreign direct investment shot up from $97 million to $25 billion.

-Exports jumped from $18.1 billion to $155 billion.

-Software and services exports rose from $50 million to $40 billion.

-Mobile phone subscribers base grew from one million to 286 million.

-Food grain output rose from 176 million tonnes to a record 230 million tonnes.

Among the key factors driving this growth is its human capital where India is estimated to have the fourth largest reservoir of scientific talent pool. This has enabled the creation of a formidable knowledge economy.

"Today, the world looks at India - and the enterprising people of India - with respect and admiration," the Cambridge- and Oxford-educated economist-prime minister said recently.

by Arjun Sen