Chief economic adviser Arvind Subramanian is about to complete a year in office. Subramanian, who took charge on October 16 last year, had said in his first economic survey (2013-14) that India was in a sweet spot. He still believes the same, though there has been a change in the external environment, Subramanian told HT in an interview. Excerpts.
The RBI has lowered its growth projections for the current fiscal year. What is your view?
Yes. I am not saying this to punt this question, but broad macroeconomic indicators are quite favourable. Indirect tax revenues are up, number of stalled projects has come down, public investments are high. So there are genuinely some good signs in the economy and some indicators which are not as robust. We need to see more data to draw any conclusions. In the medium term, the growth potential is clearly 8-10%.
Any challenges that have emerged in the last one year, since the time you took over?
Global markets, external environment is challenging today. But there is also an opportunity. Commodity prices have come down. That would push infrastructure growth significantly. Broadly speaking, we are considered to be in a much better position, with better prospects.
You spoke about deflation, recently. WPI is in a negative zone. Any concern?
What I meant was that we are in a dis-inflationary territory. We are far away from the price pressures. We have to be vigilant. But importantly, there has been significant moderation in inflation.
Do you think the pace of reforms could be faster?
It is a difficult question to answer as its depends on what you are expecting. The government has a reform agenda — GST (goods and services tax), improving the ease of doing business, public investments, recapitalisation of banks, addressing the discom problems — all were on the agenda and all are being taken up very seriously by the government, all these need to be implemented. On GST, the finance minister has made it very clear that it will be taken up.
So some people expect something, some others expect something else. It is a perception issue. There is a rising sense of impatience... I don’t know how this is being said. India’s rank has moved up 16 notches (in the Global Competitiveness Report by the World Economic Forum). India has topped the list (by FT) as far as FDI destinations is concerned. So data indicates something else.
India has emerged as the most preferred FDI destination, which sectors are benefiting the most?
I haven’t examined in detail the sectoral break up of FDI. I’m a little reluctant always to say FDI here is better than FDI there, growth here is better than growth there. We should focus lot more domestic and foreign investment, we should focus on growth.