Growth could reach 9% with reforms in 5 years, says Arvind Panagariya

India can realistically push its economic growth close to 9 per cent from the current 7 per cent or so, by implementing a few more reforms in the next five years, Chairman of the 16th Finance Commission Arvind Panagariya said on Wednesday.

Panagariya said Prime Minister Narendra Modi worked hard over the past 10 years to make India a friendly place for businesses, so investment is coming in.

"Today, the economy is open. In the next 2-3 decades, we can sustain a very rapid growth," he said, while speaking at the Times Now Summit.

India's economy grew at better-than-expected 8.4 per cent in the third quarter of FY24 -- the fastest in the past one-and-a-half years.

"India is currently growing in real rupees at about 7 per cent or so per year.

"Certainly with a few more reforms in the next five years, we can realistically push it to close to 9 per cent, certainly somewhere at 8-9 per cent and that can be sustained easily for a couple of decades," the economist said.

Responding to a question on former chief economic adviser Arvind Subramanian saying India's latest gross domestic product (GDP) numbers are 'absolutely mystifying' and difficult to comprehend, Panagariya said, "If you are mystified, then first you have to check (whether) mist is on your own glasses... or somewhere else."

Panagariya said the methodological change for calculating GDP during the Modi government was recommended by bodies appointed by the previous administration (UPA government).

"Nobody... has questioned the integrity of those who actually do these (GDP)numbers. This is a new kind of phenomenon, which I don't understand," he said.

Panagariya said if critics are saying there is some fault with the methodology of calculating GDP, "they have to come in and point out out the fault so that we can talk about how to make the improvements".

Subramanian had recently said India's latest GDP numbers are "absolutely mystifying" and difficult to comprehend.

"I want to be honest with you that the latest GDP numbers, I just simply can not understand them.

"I say that with genuine respect and things. They are absolutely mystifying. They don't add up. I don't know what they mean," Subramanian had said.

On electoral bonds, Panagariya said political funding is an area where the reform is "extremely, extremely difficult".

The former NITI Aayog vice-chairman recalled that he had been persuaded by the arguments of then Finance Minister Arun Jaitley in support of electoral bonds.

Talking about reform measures, Panagariya pitched for privatisation of public sector banks, saying even if there are some social objectives for which the government wants to have banks India still has far too many PSU banks.

He also called for implementing land, labour, and agriculture reforms.