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Mumbai: India will continue to implement economic reforms irrespective of who wins the Lok Sabha Elections 2019 beginning next month, chief economic adviser Krishnamurthy Subramanian said, seeking to reassure investors about policy continuity in one of the world’s fastest-growing economies.

As reforms in the past few years—from tax to inflation targeting—start to manifest, the Indian economy’s potential growth rate will rise by 50 basis points to 7.5% to 8%, Subramanian said in an interview in New Delhi. He cited the global slowdown and trade tensions as risks to economic growth, which is seen at 7% in the year to 31 March.

“The goods and services tax (GST) has given us a template for reforms absent a crisis," Subramanian said on 11 March, referring to the nationwide tax introduced by Prime Minister Narendra Modi in 2017. “Global money cannot find at this point a better country than India."

After sweeping to power in 2014 with the biggest mandate in three decades, Modi has pushed through long-pending reforms, such as a bankruptcy law and an inflation targeting framework for the Reserve Bank of India (RBI).

Investors are starting to worry about the policy outlook and economic imbalances if Modi fails to return to power. Foreign direct investment (FDI) into Asia’s third-largest economy fell 7% in the nine months to December from a year earlier.

Doing business

Modi’s Bharatiya Janata Party (BJP) lost control of three key states—Rajasthan, Madhya Pradesh and Chhattisgarh—to the Congress in December, adding to the uncertainty about a weaker government after the Lok Sabha elections. Distress in India’s farm sector and rising unemployment have dented his popularity ahead of elections to be held from 11 April to 23 May.

While reforms under Modi helped India climb 23 spots to 77 in the World Bank’s ease of doing business rankings, he’s failed to win support from opposition lawmakers to overhaul laws governing land acquisition and labor.

Land and labour will be important for any government," said Subramanian, an associate professor, who is currently on leave from Indian School of Business, Hyderabad. “That will set the stage for even higher growth."

The government appointed Subramanian as the chief economic adviser in December for three years. He earned his doctorate from the University of Chicago Booth School of Business under Raghuram Rajan, a former governor of the Reserve Bank of India (RBI).

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