Team Blitz India
The Finance Ministry released a 10-year review of the economy on January 29 with some forward outlook and signalling GDP growth close to 7 per cent in 2024-25, with scope to go ‘well above’ 7 per cent by 2030.
From about $3.7 trillion this year, India’s economy will expand to $5 trillion in three years, making it the world’s third largest, and could hit the $7 trillion dollar mark by 2030, the review reckons. Splicing India’s growth story into two phases — 1950-2014, and a ‘decade of transformative growth’ since 2014 — the review stresses that the state of the economy was ‘far from encouraging’ when Prime Minister Narendra Modi ‘assumed power’.
Growth was hobbled by structural constraints such as tardy decisionmaking, ill-targeted subsidies and a large informal sector, while inflation was unpalatably high. Post-2014 reforms have restored the economy’s ability to grow healthily with “longer and stronger” economic and financial cycles, and made India the fastest growing G-20 nation, it argues.
The review asserts that India’s 7 per cent growth when the world is growing at 2 per cent, is ‘qualitatively superior’ to 8 per cent – 9 per cent achieved when the global economy grew at 4 per cent.
Now that the twin-balance sheet problem inherited from the UPA days has turned into an ‘advantage’, the review stresses, it must translate into a wider private investment revival.
That would hinge on a broad-based consumption rebound rather than the K-shaped recovery the government vehemently dismisses.
While the 64-page report outlined key reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code, along with the push for infrastructure building, it refers to the demonetisation exercise only in passing, noting that it led to a surge in the use of noncash forms of payment.
While the Finance Ministry warned that “exporting one’s way to growth is no longer easy amid onshoring and friend-shoring of production, increasing vulnerabilities of global supply chains and the legacy of twin-global shocks,” it highlighted that domestic consumption has been robust and driven the economy to a 7 per centplus growth rate in the last three years.
“The all-inclusive welfare approach of the government is expected to contribute to the enlargement of the consumption base through the expansion of the middle class,” it said.