India will witness close to double-digit economic growth this financial year (FY22), which would be the highest among the major economies of the world, Finance Minister Nirmala Sitharaman has said. The economy is expected to grow at 7.5-8.5 per cent — as projected by rating agencies — in the next financial year, and the growth would sustain at this range for the next decade, she said on Tuesday.
“I expect that (growth) to be sustained for the next decade, because the rate at which expansion in core industries is happening, the rate at which services are growing, I don’t see a reason for India (growth) to be any way less (in) the coming decade,” Sitharaman said at the Harvard Kennedy School.
The remarks come close on the heels of many institutions projecting 9.5 per cent growth for India in FY22, including the International Monetary Fund and the Reserve Bank of India. Fitch Ratings and the World Bank expect the economy to post sub-9 per cent growth, while the Asian Development Bank pegged it in double digits.
She said the growth of any country post-pandemic cannot be compared with the pre-pandemic period. “The reset, which the globe is seeing itself, tells you a narrative that the way in which countries are going to plan the growth is going to be very different from what it was earlier,” she said.
The Covid-19 pandemic has given reasons for this reset as people are coming out of geographical territories and looking for other places to run their businesses from. “Because you no longer have the transparency and rule of law in certain geographical territories, and therefore industry is the first one to get out,” she said.
These “extraneous factors” have helped India attract industries to set up businesses here, “and to be able to produce for India, and produce in India for export from India. That’s one of the things which will tell us that India will benefit from this.”
Also, India is a huge market, which is captive in nature, she pointed out.
“Today, our demographic dividend is not a dividend without reason. It’s a dividend, which has great purchasing power ability. The middle class in India has the money to buy things,” she said, adding that the people who are moving from other destinations to invest in India and to produce in India will have a captive market. Reforms needed
She also said institutions such as the United Nations, World Bank and International Monetary Fund (IMF) need to be urgently reformed as they no longer speak for countries whose issues have remained unattended for decades.
“While reforms in countries are happening in different stages, these global institutions have remained the way they have been for the last several decades,” Sitharaman said.
Many of them now no longer speak for countries whose issues have remained unattended to for decades together, whether it is on trade, security, monetary framework and on funding development, she stated.
“There is a desperate need for all these institutions to be more transparent, represent and speak for countries which don’t get adequate representation; and therefore I would think that is something which has to happen immediately.”
With more representation, these institutions will have more equitable distribution of resources with more concern for equitable development for growth, she said.