Will witness 7.5-8.5% growth for 10 years: FM
- Sitharaman said the huge domestic market potential of India will also push growth into a higher trajectory.
The Indian economy will grow at a near double-digit pace in the current financial year and then expand at an annual rate of 7.5-8.5% for the next decade, given the nation’s investment attractiveness and demographic dividend, finance minister Nirmala Sitharaman said in Boston late on Tuesday.
“I expect that to be sustained for the next decade because the rate at which action in core industries is happening, the rate at which services are growing, I don’t see a reason for India to be anywhere lesser than that in the next coming decade,” Sitharaman who is currently in the US to attend the IMF-World Bank annual meeting and the G20 finance ministers meet said. She was participating in a conversation with former US treasury secretary Larry Summers at the Harvard Kennedy School.
On Tuesday, the International Monetary Fund kept its growth projections for India unchanged at 9.5% for FY22 and 8.5% for FY23.
Sitharaman said the pandemic reset the global economy, and how countries plan their growth will be very different from before the pandemic. Without naming China, Sitharaman said investors are exiting from “certain geographical territories” and looking for opportunities elsewhere as they don’t find transparency and the rule of law in these territories. “Therefore, industry and investment are the first ones to get out. They are looking for destinations where certain assumptions can be taken up, such as the rule of law, democracy, transparent policies, and assurance that you are in a broad global frame of things and not an outlier. All these are extraneous factors that help India,” she added.
Sitharaman said the huge domestic market potential of India will also push growth into a higher trajectory.
“You would have people tell us that its population is big, but you don’t have purchasing power capacity, and therefore nothing can be sold to you all. Today our demographic dividend is not a dividend without reason. It has great purchasing power. The middle class in India has money to buy things. So people who are moving from other destinations to invest in India, to produce in India will have a captive market,” she added.
The finance minister said the highly skilled manpower would also attract investors to India. “The same demographic dividend also gives us another advantage of skilled manpower in various areas. You find most of them in STEM as a result of which many of the areas where we have opened up investment possibilities such as space, atomic sciences, financial sector—Indians are contributing not only in India but also outside India in technology businesses. That is also one of the reasons India will attract investment,” she said.
Sitharaman said irrespective of the fact that globally people have learnt to be more supportive of the locals, India today is still the best in agriculture. “Food security of many countries depend on imported food. Many in the Middle East depend on India for their basic food material. So we will be among the largest exporters of food and processed food materials.,” she said.