Time to focus on Growth and reforms

The Indian economy’s annual growth rate of 7.2% was no flash in the pan and reasons need to be understood by looking at all that has been done in the last nine years, and how India is positioned to be the largest growth contributor to the global economy. Getting there will be one part of the journey. The second will be to sustain it in the wake of global headwinds, oil prices, geopolitical uncertainties and vagaries of monsoon.

In the past decade, the state has boosted spending on infrastructure, ramped up on supply-side policy reforms, and further formalized the economy along with never before seen digital off-takes for transactions. All that has come together at a critical junction that makes India readier today than ever before for further growth.

The sentiment by international corporations is higher today for India than other Asian economic markets and foreign direct investment is seen as an important propeller in conjunction with state and private local capital.

Research reports point to the steady rise of manufacturing and capex as a percentage of GDP. As India and its youth population, which is the largest in the world, mature, discretionary consumption will also evolve. The consumption acceleration is expected to see Indian per capita income more than double by 2032.

According to an economic report by Morgan Stanley, at a systemic level, the financial ecosystem is pegged to see stable inflation and shallower interest rate cycles.  The commerce and industry ministry said that India’s merchandise and services exports will cross $2 trillion by 2030 from the current level of $765 billion (which in itself was significant given global circumstances), on the back of a more dynamic foreign policy.

However, to build on this fast, and now, India needs to be crowding in private savings and private capex. How can that be achieved? For that we need further reform to the drive divestments of non-core assets, and bring laser-sharp focus on ease of doing business along with the states.

This government’s focused execution across long-term projects, the robustness of the financial system and tax collection plans like GST have made the country the largest GDP contributor in Asia. Sustaining it and working across progressive reforms will ensure India becomes one of the largest contributors across the world as well.