The average growth rate of 7.5% achieved in the last five years is the highest for any government since liberalisation, despite global headwinds, Chief Economic Adviser Krishnamurthy Subramanian said.
Mr. Subramanian asserted that the growth rate was high notwithstanding all the controversy surrounding the GDP data. “The Indian economy has grown at a very high rate, and despite any controversy that you must have read in the newspapers, let me validate that in the three months that I’ve spent [as CEA], one of the things that I’ve realised is that the touch-points of policy in India are large,” the CEA said.
“Therefore it is very hard to create a narrative that is different from the truth,” he added. Mr. Subramanian was speaking at the Confederation of Indian Industry’s (CII) Southern Region conclave ‘Industry Future Forward’.
The CEA also said that the highest growth rate had been achieved amid challenging conditions, which provided resilience to the economy.
“This growth has been achieved amid headwinds against globalisation that have actually dampened our exports. In 2015 and continuing later, the credit culture and credit growth were in quite a bad shape. The growth has happened in the last five years, despite the credit growth being much slower and almost grinding to a halt, especially for small and medium firms,” Mr. Subramanian said.
He also said that the growth was led by consumption in the domestic economy, which in itself was important, given the fears about recession that economists were anticipating globally.
“The fact that our growth has happened on domestic consumption ensures resilience and makes us more immune to the shocks experienced globally. That is a good aspect we should definitely keep in mind,” Mr. Subramanian said.
Lower inflation
Another important aspect was lower inflation, which had come down from a double-digit level of more than 10% in 2014-15, he said.
“Because of lower inflation, purchasing power increased, boosting consumption. Also, the change in the last five years has been the inflation-targeting mechanism adopted under the monetary policy committee framework of the RBI,” Mr. Subramanian said.
He also pointed to reforms such as the Goods and Services Tax and the Insolvency and Bankruptcy Code implemented during the present regime.
