The Indian economy can grow at more than 8 per cent in the next decade if global economic environment remains supportive, chief economic adviser (CEA) to the finance ministry Arvind Subramanian said on Monday
“We are already growing at 7 per cent plus, so I think that 8 to 8 per cent plus growth for the next 10 years is imminently doable, if the international economic environment cooperates,” Subramanian said at the launch of a book India’s Long Road: The Search for Prosperity by Vijay Joshi, Emeritus Fellow at Oxford University.
The Indian economy grew by 7.6 per cent in 2015-16 and the government is expecting 8 per cent growth this fiscal. A good monsoon is expected to aid growth this fiscal.Subramanian said it is difficult for India to implement ‘big bang’ economic reforms when the country is not facing any serious economic crisis and when power is dispersed within the Centre and among the Centre and states.
“The fact that we are not in crisis means the incentives for reforms are (missing),” he said at the launch organised by the German embassy.
He noted that India has grown at an average of 6.5 per cent in the last 35 years.
Subramanian also said that there is no control over the exchange rate due to opening up of the economy to foreign capital flows over the last 15 years.
“We have progressively opened up to all kinds of capital flows, and we are losing control as we open up,” he said. The incremental reforms being pursued by the government, greater sharing of resources with the states and the India’s mature level of political institutions should push higher growth, he said.
Speaking about the book, Joshi said India would require 6-8 per cent growth in per capita incomes over the next 25 years to become a high income economy with a decent standard of living. Joshi said India is yet to attain the right balance between the state and the market economy. “The state in India continues to be a jack of all trades. It should instead be the master of a few things,” Joshi said, adding that the Indian state should get out of commercial enterprises.
He said the argument of a universal basic income for Indian citizens makes sense in a poorer country like India. It can be pursued along with elimination of subsidies which are given through lower prices, Joshi said.
The CEA argued that a basic income scheme can be tried in the most disadvantaged regions, rather than making it universal to start with.