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India is projected to experience a growth rate of 6.5 to 7% until 2030, even without the need for further reforms, according to the Chief Economic Advisor (CEA). Des-pite facing various challenges such as the Russia-Ukraine war, global economic slowdown, high inflation, heatwaves, and unfavourable weather

conditions, the Indian economy has displayed commendable growth, positioning it as one of the world’s fastest-growing economies. CEA V Ananta Nageswaran expressed confidence that the Indian economy is currently operating on “autopilot” and will continue to grow steadily within the 6.5 to 7% range until 2030, despite the uncertain future trends in the global economy. Nageswaran shared this perspective during the CII conference in Lucknow on June 9th.

CEA’s current outlook on the economy is optimistic. Nageswaran

believes that the initial estimate of FY23’s GDP growth rate at 7.2% has been underestimated and expects it to be higher when the final estimate is determined in 2026. He considers the policy implementation of the

past eight to nine years to have been in the right direction. Drawing a comparison to China’s growth between 1979 and 2008, he anticipates that India will sustain growth for 10 to 15 years. Previously, India experienced intermittent periods of high growth, but it was often short-lived due to issues of overheating, resulting in a slowdown. However, Nageswaran believes that India is currently well-positioned to avoid overheating problems due to prudent economic policy implementations, enabling sustained growth for the next 10 to 15 years. He also suggests that with further reforms in skilling and the factor market, India could achieve growth rates of 7 to 7.5%, possibly even reaching 8%.

Many observers are pleased with India’s economic prospects due to various initiatives undertaken over the past decade. Significant investments in infrastructure have improved the supply-side of the production sector.

Efforts to formalize the economy and the high level of digitization are expected to enhance overall productivity. Additionally, the Kausal Vikash Yojna scheme has provided substantial training to many people, equipping them with skills that will contribute to increased productivity in the production units. Furthermore, India’s status as a significant contributor to the world GDP has attracted foreign investments in various forms, such as FDI, making it an appealing destination for global investors. These factors have contributed to higher GDP growth in the Indian economy.

However, achieving sustained growth is not an easy task. Several factors, including the availability of inputs and effective demand matching production volumes, must be maintained on a sustainable basis. Additionally, external factors can influence the growth trajectory. Some economists, like Professor Arun Kumar, are critical of GDP estimation, emphasizing the need to accurately assess the contributions of the informal sector, including agriculture,

allied sectors, a significant portion of MSMEs, and self-employed service holders. Unfortunately, data on the contribution of the informal sector is often delayed by several years.

External headwinds also pose challenges

to India’s growth. May’s trade data

indicates a 10.3% decline in overall trade compared to the previous year, with continuous deceleration in exports over the past four months. Import figures for

May 2023 also dropped by 6.6%, resulting in a widened trade deficit. Reduced

imports can signal lower demand for luxury items, which is not favourable for India. Weak global demand, the Russia-Ukraine war, high interest rates, and economic

slowdowns in the US, China, and

Germany have been cited as reasons for the negative impact on Indian exports. In response, the government plans to intervene through measures such as participation in international trade fairs

and focused efforts to increase Indian

goods exports to 40 countries, as indicated by the Union Secretary of Foreign Trade, Sunil Berthwal, and A Shaktibhel,

president of FIEO (Federation of India’s Exporters’ Organization).

Therefore, predicting the long-term growth path on a sustainable basis is challenging, especially considering the economic problems faced by many global economies, particularly developed ones.