Indian economy has definitely ‘taken-off’, in an irreversible manner, endowed with an economic momentum irrespective of the vagaries of politics and weather. This is to be seen from its Gross Domestic Savings of 29.1 per cent and Gross Capital Formation of 30.1 per cent, which contributed to its 7.1 per cent GDP growth rate in 2004-5.

Indian GDP is expected to reach 8.1 in 2005-6 — an amazing growth rate for such a large economy, and should be envied by all South Asian nations. And it is not just the growth rate that is remarkable; but achieving growth with macro-economic stability, as inflation is expected to be around 4.7 per cent (compared to Nepal’s 8 per cent this year). By the end of 10th Five Year Plan (FYP) India’s GDP is expected to reach 7 per cent — just short of the 8 per cent target set in 2002 — despite the draughts, floods, tsunami and earthquakes.

Now, for the 11th FYP, Prime Minister Manmohan Singh has set the GDP target at 10 per cent, which will impact the social psychology of its neighbours with unknown consequences for the region’s internal politics and foreign policies.

Developments henceforth will not be in the ‘business-as-usual’ mould in the Indian sub-continent as the world’s attention is drawn here. It has already begun with the visits of Chinese, Russian, French and American presidents, and the British PM, in quick succession. A new geo-economics, geo-politics and geo-psychology is emerging in South Asia that will shake regimes that remain as economic laggards.

Behind all dynamism and creativity lies youth power, which has remained a passive political force for social change. The power comes from the new found wealth derived from the exponential growth in information and knowledge of developments everywhere creating the so-called “borderless world” as a consequence of hectic pace of globalisation. This power goes unaddressed in rest of South Asia resulting in accelerated youth alienation, anxiety and angst that is at the heart of insurgency and terrorism.

The quest for more growth should be the overarching consideration of all political and social leaders, as it is the surest way to poverty eradication and employment. Listen to Finance Minister Chidambaram, who so poetically said, “Growth will be our mount; equity will be our companion; social justice will be our destination”.

Will it be possible for India to hit double-digit growth, and Nepal too? Not unless India makes a breakthrough in energy sector, which needs to grow by more than 10 per cent per annum. And this is precisely where Nepal too can attain double-digit growth and eradicate poverty. This double-digit growth will eradicate poverty by 2015 (and not simply halve it as targeted by the national plan based on past trends and expected foreign aid until that time). A double-digit growth will unleash the resources for dealing with the challenges of national security, human security and balanced national development, all simultaneously.

On the sidelines of the King-party negotiations we, in Nepal, should get all the former finance ministers to hammer out a national consensus on financial and economic reforms in consultation with donors as partners together with each political party’s economic think-tank. A mid-term review of the 10th FYP deliberated in the National Development Council chaired by the King could be a fitting starter for the process of reconciliation over economic, fiscal and financial affairs. Such a review should also incorporate the achievements and setbacks faced by INGOs, NGOs and Community-based Organisations to formalise the civil society’s participation as partners in development and to encourage them to be transparent, accountable and competitive outfits genuinely serving the interest of the intended poor beneficiaries as professionals and volunteers.

Donors must revisit their aid conditionalties and scrap many of them so as to adjust to hardcore ground realities of the ongoing conflict. They should provide debt relief tied to social reforms — as well as land and tenancy reforms operationalised through the modality of statutory Land Bank as envisioned by the King. Ending feudalism calls forth such a bank. It will be the proper instrument to assault hunger, unemployment, inequality and exploitation of the peasantry by landlords, wholesale merchants and informal moneylenders. It will also serve as an instrument for provision of food security for the poorest and generally lead to marketisation of land assets for commercialisation of agriculture.

It would be fitting to end with other prominent tenors of Chidambaram’s budget: levying service tax to meet his populist programmes will not go down well with urban middle class even if 54 per cent of GDP is with this sector, especially when agricultural income goes untaxed; he has struck the eight chord for a ‘new India’ by appealing to the imagination and drive of the youth and embellishes the latent appeal by quoting Walt Whitman and Swami Vivekananda.

Rana is former finance minister