Why not push for a 9 per cent growth rate?

Abstract

One quite indisputable gain of the reform has been the increasing openness of the economy. The rise in the openness ratio began in the mid-1980s and accelerated in the 1990s, following the depreciation of the currency in 1990-91. However, the 1997-98 budget and the current exchange rate policy, it is argued here, will lead to a stagnation in the openness ratio, unless corrections are made. A bolder investment programme and a fairly large depreciation of the currency would lead to a sustainable growth in excess of 9 per cent. Without such correction, growth is likely to fall after a year to less than 6 per cent and would bring back the situation of ^payments problem that characterised the late 1980s. Of course, the current orthodoxy of the policy-makers and the RBI would have to go.