Days after the International Monetary Fund (IMF) lowered the growth projection from 12.5 per cent to 9.5 percent for fiscal 2021-22, the Chief Economic Adviser KV Subramanian on Sunday said that India stands out singularly as the one and only country that has instituted path breaking reforms over the last year and a half. ‘’India will see GDP growth of more than 7% this decade due to economic reforms. Much like the 1991 reforms that created a huge momentum of growth for over three decades, the reforms over the last year and a half will also position India for a very high growth pace in the coming decades,’’ he noted.
He was virtually delivering the Centenary Lecture on the occasion of the 100th Foundation Day of the Mumbai School of Economics & Public Policy today.
Subramanian pointed out that the role played by JAM (Jandhan Aadhar Mobile) trinity in the administration of welfare programmes efficiently in the country and how MGNREGA programme has become a better vehicle for distressed employment.
‘’When we start growing at 7, 7.5%, let us not forget the pandemic years for the next two-three decades,” he stated, saying that while analysing growth, we should not ignore the fact of the Pandemic year. Also, he pointed out how growth is far more important for the less privileged section and the smaller firms than the privileged,’’ he said. He further noted that “We need growth so that we have resources to do efficient welfare.”GST rate structure rationalisation on govt's agenda, definitely going to happen: CEA K V Subramanian
Private Investment key to Growth
Speaking about the significance of privatisation, Subramanian said that durable growth comes only from private investment. Consumption-driven growth does not deliver durable growth. ‘’Our history is very clear that respecting invisible hands of markets and enabling trade was an important fact of our DNA. Reforms that we are now undertaking is basically India going back to its DNA. When we acknowledge that the respect for private sector, trade, markets has been part of our DNA and that is what has led to such prosperity, then this will not create resistance among the average Indian,” he added.
According to Subramanian, there are two key aspects of Public Policy comprising Supply side reforms which remove friction in supply side economies which will help to increase private investment and Capital expenditure in enabling private investment very critical in virtuous circles.
“A capital expenditure of Rs 100 will add Rs 225 to the economy in that year and Rs 480 over the duration of capital exp,” he said.
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