Illiteracy is widespread in India

But less than half of India's women can read and write, while only about 70% of the men are literate, the Fund pointed out.

Beating back poverty is not an easy task, however.

Even the government's own economic growth target of 6.5% will not suffice; 10% growth would be needed, economists said.

And some analysts say there could be worse to come with the GDP figure eventually being revised down to between 4% and 5%.

Manufacturing slump

The government's target was set a year ago, ahead of the start of the US recession which has been spreading across the world ever since early last spring.

India's manufacturing sector is in the doldrums with growth expected to fall to 3.3% for the year to March from 6.7% a year earlier.

But farmers are doing well, with the agricultural sector having bounced back from an 0.2% fall a year ago to an anticipated 5.7% growth rate this year.

The service sector is also growing with earnings from trade and transport, communication and tourism expected to have grown by 6.7% for the year to March.

Bright future

Next year should be better for India's manufacturing sector with growth of 5% in the year to March 2003, said Kotak Mahindra Capital's executive Indranil Pan.

"Some of the demand will come from the higher agricultural output and the second factor will be higher export growth if the US economy rebounds," he said.

Consequently, India's gross domestic product should grow by 6.1% in the year to March 2003, predicted ICRA economist Saumitra Chaudhuri.