Chief Economic Advisor (CEA) Arvind Subramanian today said India can grow at 8-10 per cent, provided exports put up a strong show.
“I believe very strongly that if we are to grow at 8-10 per cent, we have to have very very strongly performing exports. I don’t think there is one historical experience in the last 50-60 years where countries have rapid rate of growth without having strongly performing exports,” Subramanian said at an award function here.
He, in fact, made a case for exporting labour-intensive goods.
International economic environment on exports is not in India’s favour as Europe, Japan and China are slowing, the CEA said.
Taking note of loose monetary policy followed by some countries, Subramanian said: “(It) is going to impact our growth performance.”
He was apprehensive that India might lose its biggest market of the world, with big countries increasingly negotiating preferential trade agreements.
“If you look at what’s happening across the world, more and more number of big countries are negotiating preferential trade agreements. The US is close to completing an agreement with a number of Asian countries and the European Union.
“China is also is soon going to be part of trans-Atlantic trade agreement. There is a real risk that we (India) are going to be excluded from the biggest market of the world. We are going to be a victim of trade diversion,” Subramanian said.
“Non-tariff barriers will also be disadvantageous for us. I think that these are really huge challenges for the external trade environment that we have to reflect very carefully.”
The CEA stressed on need for a competitive exchange rate and better local infrastructure to boost exports growth.
“We have to have a competitive exchange rate. We need to upgrade infrastructure to boost exports growth,” he said.
Subramanian expressed hope that the government’s Make in India initiative will help strengthen the economy.