SENIOR Minister Goh Chok Tong is convinced that India will be the 'next engine of global growth' alongside China.

But for India to rise fully, it has to overcome many challenges at home that range from poverty to financial reforms, he told the Global Indian Diaspora Conference on Friday.

He said: 'The agricultural sector has to modernise and be made internationally competitive.'

This will shrink the poverty rate, he indicated, noting that one in five Indians live below the poverty line.

Education will have to improve to address the shortage of skilled labour, he said.

But he was heartened that the Indian government will expand the number of engineering and medical colleges, as well as universities and schools.

Better infrastructure will also put the Indian economy on a better footing, he said. Its infrastructure growth is now 2.5 times slower than China's pace.

'The banking and insurance sectors could be further liberalised to deliver more credit and financial services to more people and, more importantly, to lower the cost of doing business in India,' he added.

Though he argued for more rapid change, he was acutely aware that 'local politics may stand in the way'.

However, Mr Goh, who had sparked a mild India fever among businessmen here in the early nineties, has remained upbeat about India.

'While India still faces many domestic challenges, India's rise is real,' he said.