Report praises India for efforts to boost growth

The report notes that personal income has doubled in just over 11 years and praised India for its efforts in reducing poverty. 

As an example, the OECD identifies the National Rural Employment Guarantee Act. 

The act guarantees 100 days of employment a year for adult members of any rural household.

Equally positive is the OECD’s assessment of India’s financial sector, which it says “proved resilient in the face of the global crisis”. 

The report notes that most of India’s banks should be able to meet new Basel III global banking requirements. 

In terms of education access, enrolment and literacy rates are reportedly improving through such initiatives as the 2009 Right to Education Act.

However, the OECD criticises India for allocating only 1% of GDP to healthcare, the eighth lowest rate in the world. 

By contrast, 9% is spent on subsidies in energy and other areas, most of which fail to reach the poor.

The OECD says the subsidies are diverting money away from infrastructure development and consolidating the country’s finances.

Despite the subsidies, however, annual inflation in the country reached 9.1% in May. 

As a result, the Reserve Bank of India last week raised interest rates for the 10th time in 15 months, to 7.5%.