Compared with the average rate of growth of 6 percent per annum since the late 1980s, India has been growing at 8 percent per annum in the last three years. Is this a shift in the trend growth rate or an unusually strong upswing in the business cycle? Much of the evidence points to the former as the answer. Assuming this to be the case, India still faces an enormous challenge of transformation with 77 percent of the workforce in the rural areas, 59 percent engaged in farming. A unique feature of India's growth has been virtually no increase in the share of manufacturing in the GDP since 1991. fast growing sectors in India remain either capital intensive or skilled-labor intensive. If India is to transform itself from a primarily rural, farm economy to a modern one, it must bring about policy changes necessary for the growth of the unskilled-labor-intensive industry. This requires, most importantly, the reform of labor laws and building of infrastructure, especially power.