'US-China Trade War An Opportunity For India'

CHIEF Economic Advisor Krishnamurthy V. Subramanian discusses with BW Businessworld’s Suman K. Jha the current economic slowdown, and says “we can certainly grow at about 8 percent in real terms to reach our goal of becoming a $5-trillion economy by 2024”. Excerpts:

- Suman K. Jha

Various economic indicators suggest that we are in a slowdown. What are your thoughts?

As the recent Economic Survey has pointed out, investment, especially private investment, is crucial to driving the virtuous cycle that enhances productivity, thereby fostering exports and creating jobs, which, in turn, contribute to demand in the economy by enhancing the purchasing power. In this context, the Survey also pointed out that the investment rate has been slowing down in India over the last several years. As investment affects growth with a lag, the current situation stems from this slowdown in investment.

Is this slowdown India-specific, or are we part of a global recession? What do you think?

While the global economy is slowing down, India remains a bright spot and will continue to be among the fastest-growing economies in the world. That said, by focusing on reviving the investment cycle, we hope to raise our growth rates.

The US-China trade war will further deepen the recession. Is India prepared for it?

The US-China trade war presents an opportunity for us as we have enough scope for increasing our share in world trade. But for that we have to focus on boosting the productivity of our enterprises as growth in exports can only stem from it. Remember, a consumer buys an imported product in place of a domestic one only if it is available at a lower price for the same quality or at a higher quality for the same price. Therefore, sustained growth in productivity is key to exports.

In India, while the formal economy is growing at more than 7 percent, the informal economy continues to contract. Is it because of demonetization and a complex GST?