Despite registering the slowest growth rate in the last six quarters in April-June period, India has the potential to sustain 8 to 10 per cent growth rate during the next two to three years, said Arvind Subramanian, Chief Economic Advisor.
“First quarter GDP growth number came out yesterday. GDP growth was 7.1 per cent in first quarter. As per my estimate, India’s potential growth rate is between 8 and 10 per cent in next two to three years,” Dr. Subramanian said, addressing an Economic Survey Outreach programme here.
He, however, projected the growth rate with a rider saying, “if we continue to do all the things the government is doing and if world economy picks up a little bit as it did in 2000, then the growth rate would even clock double-digit in next two to three years.”
“Where would this growth come from? China has been growing at 10.5 per cent for last 25 years. India, since mid-1970 or 1980, has been growing at 6 per cent, which is not bad. Till 1980, we were growing at 3 per cent which is called Hindu rate of growth. After that we have grown at significantly higher rate. But, it is well below the growth rate of China,” Dr. Subramanian said.
According to the renowned economist, in the long run, the country’s economic development will depend its political stability. “Over the next few years, China has to slow down in terms of economic growth. For India, on the other hand, the process of normalisation is going to involve much faster growth because we are underperforming. We have now the opportunity to become normal again and become a fast-growing economy.” In this scenario, India would grow at 8 to 10 per cent while China’s growth rate would come down to around 6 per cent over next two three years, he said.
Dr. Subramanian batted for one price for one product in the market and expanding the scope of the direct benefit transfer model for achieving faster growth.
“In the last two years, we have taken up a series of very important reforms. We also passed bankruptcy law which is important because in our economy, unviable enterprises were continuing to survive for long, rather than exiting. The relationship between government and RBI has been firmly settled,” he said.
