The Indian economy is now on “auto-pilot” mode and will grow steadily in the range of 6.5% to 7% from this year till 2030, even without further reforms, Chief Economic Adviser (CEA) V. Anantha Nageswaran asserted on Friday, adding that the 7.2% GDP initial growth assessment for 2022-23 could be an underestimate.
Noting that the economy has been prone to ‘overheating’ after three-four years of strong growth over the past three decades, the CEA said the sound economic policies of recent years meant that India could now grow for a longer period of “seven or 10 or 15 years like China did between 1979 and 2008” without “running into overheating problems”.
“The Indian economy if I may say so, is on a state of autopilot… If you look at the private consumption, the growth rate since the pandemic has now caught up with the trend if the pandemic had not happened. So, whatever we lost in 2020-21, we have made up already,” Mr. Nageswaran said at an interaction with Confederation of Indian Industry members.
While the 7.2% GDP growth print for last year was higher than what many expected, Mr. Nageswaran said he was confident that the number would be even higher by the time the final estimates for 2022-23 come in January 2026. “That is the momentum in the economy that we are witnessing that even 7.2% will turn out to be an underestimate and not an overestimate of growth last year,” he underlined.
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“Between now and 2030, based on what we have done so far without even assuming that further reforms will be done, I can say that we have the potential to grow steadily between 6.5-7% and if we add the additional reforms on skilling, factor market reforms among others, we can go up to 7-7.5%, and possibly even 8%”, he further added.
‘Lots to look ahead’
Emphasising that countries of India’s size with its per capita income levels will always have challenges, Mr. Nageswaran said there was “lots to look ahead”. “The unresolved issues should not be seen as problems but as actually low hanging fruits, which will further unlock economic growth,” he noted.
“In the last 30 years, whenever the Indian economy grew very strongly for three to four years, it used to run into problems, inflation will pick up, imports will go up, the currency will become very expensive, and then we have to take some drastic action… because if you run a machinery for a long period, it tends to get overheated. That is a law of physics,” the CEA said.
“But the speed with which we get overheated was a little too quick in the past. This time, because of all the various good things we did in the last eight to nine years, we feel that the economic machine can run for eight to 10 years without getting overheated.. that is the hope that we have at the moment,” he summed up.
