Skilling a challenge for India's sustainable growth: Lipsky

Describing India's large young population as a key strength for growth, former deputy managing director at IMF John Lipsky today called for education and skilling in particular for sustainable high growth.
"Education is a big challenge for India.. To make sure that this young population is adequately trained and have the opportunity to acquire skill.. Otherwise a rapid growth in population can also create problems," Lipsky told PTI in an interaction here today.
He said the medium-term growth prospects for the country seems very good and he does not have any reason to differ from the higher forecasts made earlier by the IMF managing director Christine Lagarde and the OECD.

Lagarde had said she expects growth to pick up to 7.2 per cent this fiscal year and accelerate further to 7.5 per cent next year.
"The real issue is sustainability. Can India sustain strong growth? Things are perfect but they are unusually favourable not just in terms of the circumstances facing you in the medium-term, but also about the international attitudes about you," Lipsky said.
He said with fall in energy and commodity prices the external environment has been favourable for India.

"The external environment in broad term has been favourable. India would benefit from the stronger global growth and stronger demand growth," he said.

He said internationally there were no major risks for India, but key challenges are domestic.
Talking about the flexible inflation targeting regime set by the government and the Reserve Bank, Lipsky said it was a very positive element for India.
"Broadly, this is a rule-based approach. It gives the RBI a clear target or benchmark. They will then explain their action in relation to attaining that goal. So, appropriateness of the target and credibility in being able to meet the target will be a very positive element for India.
"Lowering inflation expectation and creating expectation of low and stable inflation would be very helpful for the process of sustainable development," he said.

Lipsky also feels the current forex reserves level at USD 335 billion is adequate and can act as a buffer to any kind of external vulnerabilities.