Chief Economic Adviser (CEA) V Anantha Nageswaran on Tuesday said that he is not giving up on the 8% plus growth potential for India, which can kick in if the services, higher manufacturing capacity, and the plans to plug in with the global supply chain come alive. He also pointed out that India may achieve its potential growth if the global situation becomes less hostile. It may be noted that the Economic Survey tabled in Parliament today assumes India’s GDP growth at 6–6.8%.
“We have gone through multiple shocks. Now that we have addressed these issues one by one and as soon as the global conditions become more benign and less hostile to us, some of the parameters that we expect to see in the economy will manifest. Have we given up hope on 8% GDP growth? No. Even without export growth kicking in, we can strive for 8% growth if several dimensions over what we have already done are addressed,” Nageswaran said.
Nageswaran, however, mentioned the reasons why 8% or 9% GDP growth should not be expected immediately. “The difference between the first decade and now is that the global economy was booming while now it is not. Also in the second decade, in spite of the unconventional aggressive monetary easing in the developed world economic growth would not have been to the extent that they anticipated. That is one of the reasons why export performance in the second decade was not as good as the first decade. So we are prudent in not assuming that export would be such a big contributor to growth as it was in the first decade,” Nageswaran said.
“But if it does turn out to be wrong and the global economy does better, and given India’s services growth and the manufacturing capacity being created and the efforts to plug us into the global supply chain succeed, that will see our potential growth rise from 7% to 8%,” said Nageswaran.