India's projected growth rate to double economy in 10 years
India's projected GDP growth of over 7% for the current fiscal is "amazingly fast" and if this momentum is maintained the size of the economy can double within a decade, Asian Development Bank (ADB) Chief Economist Yasuyuki Sawada said. The country shouldn't worry about not achieving 8% growth but focus on increasing domestic demand by reducing the income inequality, he said. Here's more.
Growth driven more by domestic consumption
India's growth is driven more by domestic consumption than exports, the chief economist, Sawada, added. The Asian Development Bank (ADB) has projected India to remain the fastest growing Asian nation with 7.3% growth in 2018-19, and 7.6% in 2019-20. The Indian economy is forecast to grow at 6.6% in the 2017-18 fiscal ended March 31, slower than 7.1% in 2016-17.
Achieving over 7% growth is really amazing
"7% growth is amazingly fast. If a 7% growth continues for 10 years, then that economy's size doubles," Sawada said. "Being one of the largest economies in Asia, achieving 7.3% this fiscal and next year, 7.6%, is really amazing," he added.
India's economy is the sixth largest in the world
The size of India's economy is about $2.5 trillion currently, making it the sixth largest in the world. Economic Affairs Secretary Subhash Chandra Garg had said recently that the country is on track to double the size of its economy to $5 trillion by 2025. Sawada said, however, that clocking 8% growth is a "big challenge" for India as of now.
India should not worry about not achieving 8% growth
"7% growth is a very good number and India should not worry about not achieving 8% growth," ADB's Yasuyuki Sawada said. Asked whether export revival would be important for driving the economic growth, he said that half of India's growth is driven by private consumption followed by investment and hence domestic market seems to play a major role in growth.
Consumption can stimulate more production and more employment
"Export isn't a necessary reading for growth. Rather domestic market seems to be very important...to support growth rate. Export is one part of growth driver, but Indian growth is driven more by domestic market," Sawada said. Sawada said inequality and poverty reduction would play a "very important role" in achieving higher growth because consumption can stimulate more production and that can absorb more employment.
