With the Indian economy growing by 7.9 per cent in the first quarter of the 2015-16 fiscal, a top Indian planner today said that the country was making “good” progress to return to the average GDP growth rate of eight per cent recorded between 2003 and 2011.
“Today, there is a good bit of turnaround” in the economy which was not in a “great shape” when the Narendra Modi government came into power in 2014, NITI Aayog Vice Chairman Arvind Panagariya said at a discussion organised by the Asia Society Policy Institute on the two years of the Modi government.
He said for the 2015-16 year, the Indian economy grew by 7.6 per cent and in the last quarter of the fiscal, the growth rate was 7.9 per cent.
Panagariya said he had been saying that the economic growth could touch 8 per cent by the time the 2015-16 fiscal year ended and the 7.9 per cent growth achieved is “pretty good outcome from that perspective.”
He noted that inflation has been contained around five per cent and forex reserves are also in good shape.
“Some of the outcome-related symptoms, related largely to the stabilisation of the economy are beginning to look good,” he said addressing the discussion attended by analysts, executives and diplomats including India’s Consul General in New York Riva Ganguly Das, Deputy Permanent Representative to the UN Tanmaya Lal, former Indian envoy to the UN Hardeep Singh Puri and former US Ambassador to India Frank Wisner.
Panagariya said the “economy is returning to its original path of growth. From 2003-04 to 2011-12 the average growth rate had been 8.3 per cent. I think the economy really needs to return to that level. So far the progress looks generally good.”
He, however, added that there are certain “continuing weaknesses” which are largely inherited.
He cited the example of the steel, construction, textile and banking sectors, saying all of these have “serious legacy issues but it should not distract us from the fact that several of the sectors” such as auto, pharma, software, engineering goods, are “doing well which is what accounts for the aggregate growth of 7.6 per cent.”
He stressed that lot of changes have happened on the policy front, lamenting that many of them have not been recognised.
“There is a lag between the policy action taking place and the outcomes being impacted. It is the fact that policy actions have happened and are continuing to happen and the fact that there is some lag makes me quite optimistic about the growth rate going forward returning to eight per cent plus,” he added.