Indiarisk: Rising rupee, scaling

Overall, six key risks that might have an impact on the economy have been identified—demographic liability, freshwater insecurity, economic shocks and oil peaks, geopolitical risks that work against globalisation, climate change and societal risks of infectious diseases. According to Samsher Mehta, director-general of CII, “The six risks are intimately interlinked and generate many other threats to the Indian economy. Along with national security, the three pillars of security — human, economic and physical — need to be raised to bring the economy to a position where the challenges can be met. The risks were identified because of their interconnectedness, which magnifies their impact.”

The report warns that continued growth is not assured and that India may not see an eight per cent plus growth rate in 2008, since political, social, economic and environmental constraints to current growth trends are already beginning to show.

Naxalism is highlighted to convey that while, “India’s elites have become more globally interconnected, the poor and lower-middle class are still disconnected and not feeling the benefits of globalisation.” This mismatch of interests, the reports says, could lead to a backlash against globalisation and slow down economic growth.

To mitigate such risks, it is recommended that resilience should be developed by continued investment in basic infrastructure and education, as well as on inclusive growth, in order to reap the demographic dividend of a young, aspirational and growing populace.