To enter the league of the world’s developed nations, India needs to develop basic infrastructure and a create a world class manufacturing sector, Wolf told a distinguished audience at Express Adda in Mumbai on Thursday.

“Given the policy settings and structure in India as it is today, I don’t believe that 9-10 per cent growth is possible,” Wolf said. “I believe that with the right policy setting it should be easily available but right policy settings do involve quite a number of changes and not all these changes are necessarily going to happen.”

Adi Godrej, chairman of the Godrej Group, who shared the dais with Wolf, was not entirely in agreement with this assessment. He said high growth rates were possible as long as the government moved on indirect tax reform and foreign direct investment in various sectors.

“India could very easily grow at 9-10 per cent even if the global situation is not very good, if only the policy decisions were on the right path,” Godrej said.

India, Wolf said, was probably the best placed among emerging economies to tackle a global meltdown, should it come upon us. “India is probably the most immune to the crisis as it is less dependent on foreign demand, foreign finance, commodities and exports as compared to other BRIC nations,” Wolf said.

He added that he was more optimistic now than two months ago, and that the risk of a global shock had reduced somewhat.

And yet, Wolf said, India is in this sweet spot at the cost of globalisation and high growth rates in the past, which could have seen its GDP become three or four times what it is now, and Indians much richer.

“If India had increased the amount of globalisation, it would have made it a little more vulnerable to the world but it would be much, much richer now. If it has to become a truly developed nation, India has to develop in this respect too,” Wolf said.

Substandard infrastructure, heath and education services and a lack of reform in land policy and labour markets stood in the way of India becoming a truly developed nation, Wolf said. India, he said, would need to undergo mass industrialisation like Japan did in the 1950s, Korea in the 60s and China over the last three decades, but on an even bigger scale.

“In the long run, I can’t see it becoming a truly developed nation from where it is now, without developing a world class manufacturing sector,” Wolf said. “While it is perfectly true that it will be politically very difficult in India to create this sort of mass industrial labour force, it has to happen, and politicians will have to work out a way of making this possible politically.”

Wolf praised the Reserve Bank of India for closely overseeing policy. This, he said, is what central banks across the world want to do now. However, Wolf cautioned, “There are lots of problems with this, as it gives central banks enormous power and there are questions on how able an institution is to focus on so many functions at once.”