India Needs Reforms to Change Policies: Martin Wolf, Chief Economic Commentator, Financial Times

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He said, “We come back to what my friend (economist) Raj Krishna called the Hindu growth rate, which is 3-4 percent. It will be a disaster as this is 2% per capita growth and India’s catching up would come to an end. “

The Indian economy has slowed, now in a 5-6% range, and will need a bit of policy change reforms, in a challenging global environment, to be successful in the coming decade, ”said Martin Wolf , Chief Economic Commentator, Financial Times. He was in conversation with Anil Sasi, editor-in-chief of national affairs, The Indian Express.

Observing the country from his early days as a World Bank economist in the 1970s, he called India’s economic reform policy “inconsistent, not positive enough” and its three drivers – trade, credit and public spending – “fairly low”. He said, “We come back to what my friend (economist) Raj Krishna called the Hindu growth rate, which is 3-4 percent. It will be a disaster as this is 2% per capita growth and India’s catching up would come to an end. “

He warned: “India is de-globalizing, not what it was before but more than the world; due to policy choices: increased protection and less attention to the competitiveness of exports. “

Drawing attention to three indicators for future planning: “Long-term performance, the impact of Covid-19 and the challenges ahead,” he said, in the long term, “credit, trade and fiscal policy will all be limited ”. The credit / GDP ratio slows (after 2010) despite the absence of financial crisis, there are “bad debts” in the banking sector, demonetization (in 2016) was a “crazy” step instead of “restructuring radical financial “, trade ratios” falling rapidly “since 2013-14.

Wolf added that India’s GDP growth at purchasing power parity of 5 percent (in 1990) to around 15 percent (by 2025, according to IMF forecasts) has been “pretty good” but incomparable to China’s’ spectacular 5 percent (1990) 35%. percent (2025) growth ”. India’s “steady growth” (6 percent per year) peaked at “nearly 9 percent in the early 2000s” but experienced “a real slump” last year. “Among developing countries, India has had a very, very bad negative blow (Bangladesh has done surprisingly well),” he said.

With the deterioration of US-China relations, India is expected to “seize the opportunity” and “reopen the economy”, become a pole of trade growth, increase international competitiveness, launch a green revolution, reform education, labor markets and the financial sector to be the “fastest-growing economy, at over 8 percent, in 20 years”.

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