India can be a $9 trillion economy by 2030: Arvind Panagariya
- Speaking at an event in New Delhi, Arvind Panagariya, the chairman of the 16th Finance Commission of India, said implementing a few pending reforms could accelerate growth rates, potentially pushing India's GDP growth to 11-12%.
India is poised to surpass the position of the world's third-largest economy by 2030, with its gross domestic product (GDP) expected to expand to $6.5-9 trillion, said Arvind Panagariya, the chairman of the 16th Finance Commission of India, on Thursday.
He added that implementing a few pending reforms could accelerate growth rates, potentially pushing GDP growth in current dollars to 11-12%.
Speaking at the Times Network India Economic Conclave 2024, Panagariya, former vice chairperson of NITI Aayog, said the Indian economy, despite major shocks like the financial crisis, non-performing assets crisis, and the pandemic, grew at about 10%.
Also Read: Vivek Kaul: India’s GDP growth slump holds lessons in forecasting
"Even if you want to assume that we will grow only 8% in current dollars, that gets us over $7 trillion (economy). So, prospects look incredibly good. But even if we are conservative for a moment and say $7 trillion, that will be a couple of trillion dollars more than the next country," he said.
"The fundamentals of the economy are absolutely solid. We have weathered the Covid crisis, a major one, and recovered from it, actually with flying colours. So, I expect us to return to at least about 7% economic growth (annual growth)," he added.
In September, rating agency S&P Global said India is on course to becoming the world's third-largest economy by 2030-31, with an expected annual growth rate of 6.7% in 2024-25.
However, India’s GDP grew by only 5.4% in the September quarter, the slowest in nearly two years.
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In the first quarter of the current fiscal, India’s GDP growth was 6.7%, compared to 8.2% in the year-ago period.
Speaking on the country's post-pandemic recovery, Panagariya said he didn't see a K-shaped recovery but an overall improvement.
A K-shaped economic recovery is when different parts of an economy recover at different rates, times, or magnitudes after a recession.
"As we have grown, we have lifted all the boats," he said.
Panagariya dismissed the notion that rising inequality is causing billionaires to become richer while the poor grow poorer, calling such claims inaccurate despite the attention they receive.
"Yes, billionaires have come in, and if you look at the distribution, if you look at the inequality in the sense of the top 1% as a proportion of the bottom 5%, yes, that inequality has gone up," he said.
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"But, the bottom 5% today, in absolute terms, are doing a lot better," he added.
Panagariya also warned of a potential resurgence in US tariff escalation, similar to policies during US President-elect Donald Trump’s first term, which could impact the global economy and trade.
"Right now, we are not included among the countries that are being targeted, but it can happen," he said.
"So, there are two issues here. One is, what happens to the global economy as a result? What happens to global trade? And the second is, what happens directly in terms of threats of tariffs on the products exported by India to the US?" he added.
Panagariya suggested that India could pre-empt potential US tariff escalations by reducing its own tariffs or committing to gradual reductions over two to three years, emphasising completing ongoing free trade agreement (FTA) negotiations with the UK and the European Union.
Also Read: RBI’s GDP projections on test as India’s Q2 GDP growth falls short
"I take an optimistic view because the US also sees that geopolitically India is very critical to it, and therefore, it is also going to be a little more careful in what it does economically with respect to India," he added.
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Business NewsEconomyIndia can be a $9 trillion economy by 2030: Arvind Panagariya
First Published:12 Dec 2024, 06:27 PM IST
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