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Wednesday, September 15, 1999 Published at 10:52 GMT 11:52 UK

World: South Asia

India boasts fast track economy

Analysts say more reforms are needed for sustained growth

By Business reporter Mark Gregory

India's economy is growing faster than expected, while that of Pakistan is doing less well.

These are among the conclusions of the Asian Development Bank's latest Asian Development Outlook Update.

The bank has issued a generally upbeat assessement of Asia's overall recovery from the economic crisis of two years ago.

It predicts average growth of 5.5% both this year and next year across a vast region stretching from the Indian sub-continent to China and Indonesia - but not including Japan.

That represents a significant improvement in growth prospects even compared with the bank's last assessment issued in April.

More reforms needed

The bank is particularly optimistic about India's economy, which is expected to expand by 7% this year and again in 2000.

However, in a reference to the country's current general election campaign, the bank warns that India's next government must be willing to press on with a second generation of economic reforms if this higher level of growth is to be sustained.

The Asian Development's Bank's upbeat view, though, does not appear to include Pakistan.

In contrast to just about everywhere else in Asia, the bank has become less optimistic about growth prospects since its last assessment in April.

The bank now expects Pakistan's economy to grow just 3.4% this year, with a further slide in growth to follow in 2000.

Poor overtaxed

Meanwhile, in a quite separate report, a respected independent think tank based in Pakistan has come up with some biting critisisms of the management of economic policy right across the South Asian region.

In its 1999 Human Development in South Asia report, the Mahbub ul Haq Human Development centre critisises governments in India, Pakistan and nearby countries for inequalities and inefficiencies in the way economic resources are mobilised and allocated through the tax system.

It says South Asian governments tend to collect their resources from those least able to pay and spend them on the most undeserving.

The Islamabad-based organisation says the bulk of revenue is raised through indirect taxation making the poor pay relatively more than the rich.

It also fiercely attacks high levels of military spending and the scale of corruption.

The centre claims that studies have shown that India's growth rate would increase by 1.5% a year if corruption were to be reduced to Scandanavian levels.

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