"VIKSIT BHARAT CALLS FOR 2.5 PERCENTAGE POINTS HIGHER GROWTH"

Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission, on what needs to be done to put India on a higher growth path and the challenges ahead

- SURABHI

MONTEK SINGH AHLUWALIA, former Deputy Chairman of the Planning Commission and noted economist, is one of the key architects of economic reforms from the 1980s. He has closely worked on and tracked policies that have fast-tracked economic growth. In an interview with Business Today’s Surabhi, he notes that the 1991 reforms raised longer-term growth about two percentage points above the pre-reforms rate and says we now need a much larger acceleration. India needs deeper reforms and higher investments for this, he says. Edited excerpts:

India’s economic growth has been slowing in recent years. What key structural reforms are needed to bring growth back to the 8% trajectory on a sustained basis?

The economy is currently growing at 6.4% in FY25, and this is expected to continue. This is not a bad growth rate, given what other countries are experiencing but it is not in line with achieving Viksit Bharat by 2047. For that, we need around 8.5% growth per year over the entire 22-year period from 2025 to 2047. And since we can expect a slowdown in later years as the economy climbs up the per capita GDP ladder, the “reference rate” we should aim at in the earlier years should be 9% plus.

In other words, Viksit Bharat calls for a growth rate that is 2.5 percentage points higher than at present. This will not be easy. The 1991 reforms raised the longer-term growth rate by about 2 percentage points above the pre-reforms rate. We now need an even larger acceleration.