Former chief economic advisor Arvind Subramanian sounded a word of caution against celebrating India's economic recovery, saying that the economy is just bouncing back from last year's slump.
“The GDP is barely back at the pre-pandemic level and IIP (Index of Industrial Production) is still below pre-pandemic level. We are mistaking or there is a risk that we mistake the natural bounce back from the big decline. It is far too early to celebrate the numbers. They are still fairly weak compared to the pre-pandemic level,” Subramanian said at a lecture in the honour of late Subir Gokarn, Business-Standard reported.
He also said that the government's policy of raising import tariffs and not signing international agreements won't help in shifting investors from China to India while harming exports.
"What I would say is that recovery is still work in progress,” Subramanian said at the lecture, organised by Indira Gandhi Institute of Development Research.
Subramaian also said normal or potential GDP growth was 4 per cent during 2013-14 to 2018-19 rather than the 7 per cent that was shown by official data, and that factual assessment of that period was needed, the report said.
He also said that India needs unskilled labour-intensive growth for inclusive growth, which is not the broad thrust of production-linked incentive (PLI) schemes.
“Both the society and politicians in India are sensitive to high inflation. That makes the task of the central bank in India much easier to address high inflation. I think that will get reflected in policy actions, both by the Centre and the RBI," he said, adding that he is "kind of cautiously optimistic" that policy will respond effectively over the medium term to make sure that inflation and inflationary expectations don’t get out of control.
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