India's phenomenal growth rate of six per cent a year will be unsustainable without serious social reform and infrastructure development, according to a panel of experts at The Indian Economy: Elephant or Tiger a Question Time event with a panel of experts, hosted by global credit insurer Atradius on 13 October 2005.

Addressing an audience of 200 business people at the Institute of Directors, the panel warned that although India has a lot of potential for investors, currently there is no effective programme for improving basic education and infrastructure in the country, which will hinder its growth in the future.

Despite the significant challenges that India faces, it also has the potential to be one of the worlds superpowers before we reach the middle of this century, said Will Clark, Regional Director of UK & Ireland, NAFTA and Australasia at Atradius, who hosted the event.

"There is no doubt that the global balance of power is shifting, and India's problems should not be viewed in isolation. How the world's largest democracy addresses these issues and moves forward will largely shape the 21st century global economy. And whether we in the West see it as an opportunity or threat is almost irrelevant. Its happening, we've got to accept it, prepare for it and embrace it."

When asked to compare India and China, the panellists agreed that India had several significant advantages. Its banking system is much more stable, it has a well-established legal system, its equity market is performing strongly and a number of Indian companies have managed to establish a global reputation.

India is also turning out a huge number of high calibre engineering and science graduates three times as many as the US. Despite that, literacy levels in India are very low 45 per cent among Indian women, for example, compared with 87 per cent among Chinese women. This will inevitably lead to problems in the future, as India will not be able to supply the skilled workers necessary for the influx of companies setting up or trying to grow.

India also needs to tackle urgently the standard of its infrastructure if it is to continue to grow at its current rate of about six per cent a year. At the moment, India has a number of development clusters such as Bangalore and Mumbai. Outside these areas, however, the road networks are extremely poor making communications between business centres and regions very difficult. It also needs to improve its energy production and distribution. This lack of infrastructure will pose a major obstacle to growth in the future if the Indian government does not address it very soon.

The event was chaired by BBC presenter, Kirsty Lang. The panel included: Dr Paul Davies, managing director of outsourcing consultancy Onshore Offshore Limited; Chris Francis, founder and chief executive of healthcare company Cardionetics Limited and board director of the Indo-British Partnership Network; Dr Gaurav Ganguly, senior economist at Atradius; Graeme Leach, chief economist at the Institute of Directors; and Sue Walton, chairman of the British Exporters Association (BExA).