India needs to export rapidly to grow 8-10%: CEA Subramanian

While the government gives concerted push to manufacturing to revive economic growth through the Make in India campaign, chief economic adviser Arvind Subramanian asserted on Saturday that India will have to focus on exports in services sector to grow at 8-10 per cent.

“It is possible to harness the Make in India campaign but instead of growth being led just by manufacturing, it has to be through a combination of manufacturing and services,” said Subramanian at the Advancing Asia conference co-hosted by the International Monetary Fund and India. “We can have a uniquely Indian model, which is export-led but not just focused on manufacturing,” he said.

The BJP-led government in some cases has even resorted to trade protectionism, including minimum import price, anti-dumping and safeguard duty on steel, to support domestic industry.

“India can’t deviate from the historical experience and grow at eight per cent without rapid exports and just depending on domestic demand,” said Subramanian.

India’s merchandise exports fell for the 14th straight month in January on account of persistent weakness in the global demand and low commodity prices, including oil. January exports fell 13.6 per cent year on year, while imports shrank 11.01 per cent, according to data released by the ministry of commerce and industry.

On macroeconomic stability, Subramanian said the government is taking a number of steps to accelerate growth and states are competing with each other, which has added to the dynamism of the Indian economy.

Subramanian also raised concern over recent comments by Donald Trump, the Republican Party’s frontrunner for the US presidential elections on scrapping the H1B Visa. “His comments are very worrying about our model of growth,” Subramanian said.

Subramanian also suggested that China should move from a surplus to a current account deficit economy to facilitate the current growth model. “China needs to become a current account deficit country to partly facilitate trade led model of growth for other countries and not just India,” he said.

On China slowdown, Subramanian said there was a need for a coordinated fiscal response at the global level to address it. “The puzzle is not China slowing down, the puzzle is why it didn’t slowdown earlier,” he added.