Indian economy is facing many short term economic challenges,mainly as a fallout of the ongoing European debt turmoil and the US slowdown,according to an OECD official.
Paris-based Organisation for Economic Cooperation and Development (OECD) is a grouping of mostly developed nations.
OECD Development Centre Director Mario Pezzini said that India is facing a “series” of short term macro economic challenges.
“(These challenges) are obviously related to the crisis in the United States first and then Europe…,” Pezzini said.
He noted that there are also challenges related to internal demand and overall liquidity.
Persisting European debt crisis is impacting India’s growth prospects,especially the exports sector. Besides,the domestic economy is growing at a relatively sluggish pace and GDP expanded by 5.5 per cent in the April-June quarter.
“I think there are long term challenges also (for India) such as social cohesion.
“…There is an issue of policies. How do you put the policies with in an appropriate coherence with that of the action of the government. How do you decide the appropriate mix of policies and the sequence of it,” Pezzini said.
Further,he emphasised that India should play a larger role in international relations.
Echoing the view,Global Development Network (GDN) President Pierre Jacquet said he too would like to see a larger role for India in the international arena amid changing global economic conditions.
GDN is an independent group that allies researchers and institutes in development globally.
“I would like to see India play a larger role in international relations for many reasons. India’s future is in globalisation,” Jacquet added.
Both of them stressed on the need for having continued dialogues among countries to take forward the agenda of social reforms.
“There is a growing conviction that there cannot be sustainable growth without inter linkages (in the society)…
The political economy of social reform is not easy,” Jacquet noted.
According to Pezzini,development is happening in countries in different conditions. “We cannot be prescriptive,like we have been in the last two or three decades…We need to go back to a more diagnostic capacity,” he added.
“In the past,we thought market forces could solve all problems. But in the present,we know that institutions matters,the social conditions matter and institution and social conditions are different in different countries,” he emphasised.