Mumbai: Chief Economic Adviser K V K V Subramanian on Sunday said that India will see Gross Domestic Product (GDP) growth of more than seven percent this decade due to economic reforms.
Virtually delivering the Centenary Lecture on the occasion of the 100th Foundation Day of the Mumbai School of Economics and Public Policy, he said,”If we look at the countries and the various measures taken by them over the last year and a half, India stands out singularly as the one and only country that has instituted such path breaking reforms during this period.”
The CEA said, “India will see GDP growth of more than seven per cent 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.”
Elaborating about the philosophy that has driven the economic reforms in India over the last year and half, Mr Subramanian explained that the economic thinking that had underlined the reforms for development in India could be seen as a tripod with three legs.
The first leg is the objective we must have. For India the objective has to be macroeconomic focus on growth and growth alone combined with micro economic focus on efficient welfare to welfare programmes. In that way the resources created by the growth are then deployed for welfare programmes like education, job creation, thereby reducing inequality.
The second leg of this tripod is thinking about wealth and wealth creation as a boon and not as a bane. Reforms pertaining to privatisation, asset monetisation, enterprise policy focus on the private sector all of these are derived from this particular leg.
Finally, the third leg is focusing on the virtuous circle, starting from private investment that generates productivity improvement and thereby enables job creation and enhance wages in the economy which eventually enhances consumption as there is more money in the hands of people.
“This must be the vision for India to pursue high growth and thereby higher development,” he said.
Subraminan pointed out the role played by JAM (Jandhan Aadhar Mobile) trinity in administrating 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 per cent, let us not forget the pandemic years for the next two-three decades. 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. We need growth so that we have resources to do efficient welfare,” he said
Speaking about the significance of privatisation, Subramanian said, “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 said there were two key aspects of Public Policy- 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 expenditure,” he said.
He also applauded the faculty, staff and alumni’s contributions towards the university as well as the country.
Professor Abhay Pethe spoke about the founders of the university and their contribution to monetary economics and policy intervention.
Vice-Chancellor Professor Suhas Pednekar, Pro-Vice-Chancellor Professor Ravindra Kulkarni, Senior Resident Fellow Director Professor Dolly Sunny also spoke during the event.
Chairman, BOM-MSEPP Mrugank Paranjape delivered the vote of thanks.