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Press Release

This decade will be a decade of high growth rate for India: Chief Economic Adviser, Ministry of Finance

Jul 29, 2021

  • Growth rate likely to be 6.5-7% in FY-23 and accelerate to 8% thereafter
  • Inflation should be range bound despite some rise in commodity prices

  • Capex driven growth leads to a sustained economic growth

NEW DELHI, 29 July 2021: Dr KV Subramanian, Chief Economic Adviser (CEA), Ministry of Finance today said that last year India had a V-shaped recovery and looking at last four quarter numbers during pandemic, India is the only country that has registered two consecutive quarters of growth. He also expressed hope that India should be able to hit high growth rate through higher investment rate and more productivity from privatization, increase in exports. "This decade will be a decade of really high growth for India," he added.

Addressing the Special Session during the 18th Annual Capital Markets Conference 'CAPAM 2021 - Beyond India@75: Accelerating Growth Through Capital Market', organized by FICCI, Dr Subramanian said, "It shows the resilience of the Indian economy which has led to the V-shaped recovery. In the fourth quarter as well, the emphasis is on capital expenditure which is one of the key aspects of our policy initiative because a capex driven growth leads to a sustained economic growth. The government has also taken steps for the sectors impacted by the pandemic," he added.

Emphasizing on the growth projections, Dr Subramanian said, "Capex creates demand in the informal sector and capex driven economy is important." He also stated that the reforms introduced by the government are as path-breaking as 1991 reforms and will indeed have impact on the investments and productivity. "The combination of rise in investment and productivity, we expect the growth in FY-23 to be between 6.5-7 percent and accelerate thereafter to 8 percent a year, he noted.

Speaking on inflation, the CEA said stated that the overall restrictions during the second wave were very less allowing supply chain to work smoothly. "Going forward, inflation should be range bound despite some rise in commodity prices," he added.

Dr Subramanian further while speaking on the fiscal deficit and capital expenditure said, "I don't anticipate either breaching of fiscal deficit target or cutting down on expenditure. Some pruning on revenue expenditure have already started but not on capex as it is important for sustained recovery," he noted.

Speaking on the impact of the second wave Dr Subramanian stated that the GST numbers also reflect a rise in consumption since it is a consumption-based tax. "Every month starting from September, the GST collections were at least Rs 1 lakh crore but it was Rs 92,000 crore in June which indicates that the impact of the second wave was not as pronounced as that of the first wave," he added.

Speaking on the likely third wave, Dr Subramanian said that the economic prospects are linked to the pandemic and the target of the government is to vaccinate the entire adult population by December. "Some of the statistics suggests that the intensity of the third wave, if it happens, may not be that large and the learnings from the second wave will be used. Therefore, the economic impact should be much lower," he added.

Mr Sunil Sanghai, Chairman, FICCI National Committee on Capital Markets and Founder & CEO, NovaDhruva Capital Pvt Ltd delivered the welcome address and Mr Dilip Chenoy, Secretary General, FICCI delivered the concluding remarks.

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