India has capacity for 13 percent growth: Prahalad

Dec 31, 2006, 3:30 GMT

Ahmedabad, Dec 31 (IANS) India has the capacity to grow at 12-13 percent and its policymakers should strive to attain that productivity level, according to renowned management professor C.K. Prahalad.

'There is no doubt we have a long way to go. But the good news is the direction and the momentum are right,' Prahalad, considered among top 10 management thinkers in the world, told IANS in an interview here.

'If we do not mess with the momentum, the industry and consumers will certainly propel India as a high growth country,' said the professor who teaches corporate strategy at the Stephen Ross School of Business at the University of Michigan.

His observations assume significance because six years ago he propounded that India should aim at a 10 percent growth. That had evoked much scepticism among management pundits at his alma mater the Indian Institute of Management here.

Prahalad pointed out that the momentum for growth was already there. Therefore, the question was not about finding the resources but to scale up productivity levels of existing facilities.

The Chennai-born professor said despite attaining high growth rates in the past five years, there continued to be two Indias - one an affluent segment and the other comprising the aspiring class.

He estimated that about 300 million aspiring Indians were able to partially gain from the good things a modern economy provided. But there were still 200 million outside the fold.

Prahalad also spoke about the controversy in India over attaining growth through special economic zones, where the Left parties, in particular, have been opposed to any concessions for such projects in the form of tax sops.

Having special economic zones is not wrong and the process should not be halted. But the social issues that are raised must be addressed by compensating people appropriately and ensuring that livelihoods are somewhat guaranteed, he added.

© 2006 Indo-Asian News Service