India's Goldilocks economy

India can't be complacent. An 8% growth rate maintained over the next two decades will be transformative, but policies still need to be enacted or modified

- NIRVIKAR SINGH

THE LATEST GROWTH figure for India, clocking in at 8.2% despite an uncertain global economic situation, bodes well for the country's medium-term economic outlook. Combined with unusually low inflation, the numbers suggest something close to a Goldilocks economy-not too hot, not too cold, but (close to) "just right". Of course, there are many things that need continued attention, such as domestic inequality, global competitiveness, and shortfalls in human capital, but these are longstanding issues, and India's current economic performance gives the government breathing room to tackle them more assertively.

India's recent growth has been relatively broad-based and balanced, although disparities in human capital continue to favour those at the upper end of the income distribution. Changes in the goods and services tax have begun a process of simplifying consumption taxes that will continue to help smaller firms and less well-off households. The changes in labourlaws reduce frictions in the labourmarket. Though some of this flexibility comes at the expense of workers in a relatively small subset of Indian firms, increased protections for gig workers, and portability of benefits to go with that change,it will give otherworkers more of a cushion. Financing mechanisms for smaller firms has been improving gradually, and the financialisation of household savings has also been creeping forward. In many respects, India is starting to look like a "modern" economy, in ways that building steel plants and rocket ships did not reflect.