- The Washington Times - Thursday, March 23, 2006

Economic growth has been integral to India’s rising geopolitical influence. The economic reforms that spurred impressive growth in the early part of the 1990s and stalled in the middle of the decade because of weak coalition governments and U.S. sanctions after the 1998 nuclear test have resumed. India’s economic future has the potential to be very promising: A 2005 Deutsche Bank Research study forecasted an average growth between 2006 and 2020 of 6 percent, and a 2003 Goldman Sachs study predicted the Indian economy would be the third largest in the world by 2050.

For this to become a reality, the United States needs to encourage the Indian government to keep pace with the private sector and to continue its economic reforms — particularly reducing India’s high tariffs, opening its markets, reasserting its commitment to education and investing substantially in infrastructure, which lags woefully behind in certain areas. It’s no coincidence that during his recent press conference with the Indian prime minister, President Bush found a prominent location at the beginning of his remarks to thank the CEOs with whom he met.

The United States and India have parallel interests in shaping a new balance of power in Asia and stopping Islamist terrorism around the world. Necessary for India to continue working toward these goals is its sustained economic growth. The country’s regional influence can be bolstered by creating free-trade networks with other Asian nations.

Indian prosperity will increase one of America’s fastest growing export markets. Merchandise exports to India increased by nearly 23 percent between 2003 and 2004, and with a rapidly growing middle class, that market will explode with potential for U.S. goods.

Attracted by a workforce that is educated, English-speaking and youthful (India will have the largest working population in the world while China struggles with aging), more than half of the Fortune 500 companies have looked to India to fill some form of support service role or other high-tech, software or information technology needs.

India’s economic outlook is not without its thorns. One thorn that should be of particular concern to the United States is the high level of public debt, which makes it difficult for the government to address the often dire need for infrastructure improvements, as well as other reforms. Poverty is still widespread despite impressive economic growth.

Mr. Bush lauded the entrepreneurial spirit in both the United States and India, citing it along with economic development and increased trade as the way toward closer relations and for India to mature both economically and, consequently, as a U.S. ally.

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