India’s GDP is likely to grow by at least 7% in the next financial year, Bibek Debroy, Chairman of the Economic Advisory Council to the Prime Minister has said at the Cafemutual Confluence 2019 held recently in Mumbai.
Addressing the conference, he said that while the GDP growth numbers of first two quarters were not so good, it would improve gradually due to introduction of several reform measures like corporate rate tax cuts and withdrawal of surcharge from capital gains.
He also said that because of transition to the new system of national income accounting, the numbers since 2012-13 are not comparable with the earlier numbers. “Let us not get swayed by the quarterly growth numbers,” he added.
On the issue of slowdown in GDP growth, he said that decentralization should not only happen at the central level, it should also be embraced at the state level, which will help states to grow at much faster pace. This would contribute to the GDP growth.
On the target of achieving $5 trillion economy in the next five year, he said that the Prime Minister Narendra Modi has indicated an aspirational target of achieving aggregate GDP of $ 5 trillion by 2024-25, which is in nominal dollars. So any estimate of the growth required to attain that target is the function of the exchange rate and the rate of inflation. “To achieve the target India needs a real growth rate of 8% at least,” he said.
For India to be able to grow at 8%, the primary source of growth will not be net exports. The government expenditure is constrained by deficit reduction and fiscal consolidation requirements, he added.
Talking about economic measures in the offing, he said that the government is likely to slash personal income tax. He said that the economic policy changes could not be announced overnight, these are incremental policy changes, some of which will be announced in the next year’s budget.
