This decade will be India's decade of inclusive growth during which it will clock over 7 per cent annual growth on the back of strong economic fundamentals, Chief Economic Adviser K V Subramanian has said, highlighting the country's reform process and its ability to convert the crisis into an opportunity that helped it to stand out from the rest of the world.
Exuding confidence over India's economic potential, Subramanian told an American audience from the corporate sector that "the fundamentals of the economy were strong, even before the pandemic. There were only financial problems."
“Mark my words, this decade will be India's decade of inclusive growth. In FY'23, we expect growth to be between 6.5 to 7 per cent and then accelerating further as the impact of these reforms is seen," he said while addressing a virtual event organised by the US-India Strategic Partnership Forum (USISPF) on Wednesday.
"On average, I expect growth to be greater than seven per cent in this decade for India," Subramanian said. During the current fiscal, he said, growth would be in double-digits and it could moderate to 6.5 - 7 per cent in the next financial year.
The Economic Survey 2020-21, released in January this year, had projected GDP growth of 11 per cent during the current financial year ending March 2022. The Survey had said growth will be supported by supply-side push from reforms and easing of regulations, infrastructural investments, boost to manufacturing sector through the Production-Linked Incentive (PLI) schemes, recovery of pent-up demand, increase in discretionary consumption subsequent to the rollout of vaccines and pick up in credit.
“When you look at the data itself, the V-shaped recovery and the quarterly growth patterns actually establish the fundamentals of the economy are strong. Looking forward, the kind of reforms that we've done and the supply side measures that we've taken will enable actually strong growth not only this year going forward as well,” said the top Indian economist.
Growth will be aided by various structural reforms, including labour and farm laws, undertaken by the government, he said. Subramanian said from the long-run perspective, India is the only country that for the last 18 to 20 months has done so many structural reforms.
“India actually in its economic thinking has stood out from the rest of the world, not only in terms of the reforms that have been done but by converting the crisis into an opportunity,” he said. Observing that every other large economy that has only done demand side measures, Subramanian said in contrast, India is the only country that has done supply side as well as and demand side measures.
The post-COVID-19 economy in India actually will be very different from the pre-COVID-19 economy, he said. In the last seven years, the current Indian government has demonstrated the ability to be able to administer welfare programmes very well, cutting out the inclusion and exclusion errors and targeting them well, he said.
“So that having already been achieved, now we need to basically have a macro-economic objective being growth and growth alone, and not sort of conflicted with your inequality in equity, because these welfare programmes doing it well, will enable in reducing inequality in the process.
"… they will put money in the bottom half of the income pyramid and thereby, also generate enormous demand, aggregate demand and reduce inequalities,” Subramanian said.