India’s growth is not as robust as indicated by the headlines’: Former Chief Economic Advisor

Arvind Subramanian, former Chief Economic Advisor of India and Senior Fellow at the Peterson Institute for International Economics, on Wednesday said India’s growth was not as robust as indicated by the headlines.

“Because, if you look at all the other indicators, private investment has been flat for such a long time. Foreign Direct Investment (FDI) has been declining. Consumption growth has been weak. So, a series of indicators suggest that the economy is, maybe, not as robust as the headline numbers are indicating,” he said at an event to mark the launch of his book A Sixth of Humanity: Independent India’s Development Odyssey, co-authored with Devesh Kapur, Starr Foundation Professor of South Asian Studies at the Johns Hopkins University. 

The book launch event was organised by the Madras Management Association and Madras Institute of Development Studies (MIDS).

Responding to the question from former RBI Governor and Chairperson MIDS Duvvuri Subbarao, Mr. Subramanian said there is one school of thought that the service sector is going to be the engine of growth. 

“Even if a services-led model succeeded, it would provide growth and opportunities for 1% to 2% of the labour force. When we talk about artificial intelligence, it’s actually a double whammy for India because it is replacing or threatening to replace exactly those kind of tasks like coding, in which now we have a competitive advantage,” he said.

“India needs to revive manufacturing. China plus one strategy (people looking to have supply chains outside China) was providing this opportunity until the Trump tariff came in. A solution will be found for the tariff issue. China’s share of low skill global exports is 45-50 %, while India’s share is 3-4 %. There is no reason why India’s share cannot be raised to 10-12 %. This will provide a boost to inclusive growth,” Mr. Subramanian added.

Speaking at the event, Soumya Swaminathan, Chairperson of M.S. Swaminathan Research Foundation said, “While life expectancy has improved significantly, what has not improved is healthy life expectancy. This means there’s a huge burden on the individual, the family as well as on the health system ultimately because of the burden of illness. This means focus should be on prevention, which essentially means providing clean air, clean water, sanitation, nutritious diet and good housing.”