India’s quest for high growth – editorials
The National Statistics Office (NSO) will release the GDP numbers for the December quarter at the end of this month. The official position, also reflected in the first advanced estimates for overall performance in the 2019-20 fiscal year, has been that the economy bottomed out in the September quarter. GDP growth in the quarter of September was 4.5%, the lowest since March 2013. Unless there is a sustained acceleration in economic activity, the medium-term challenges of the economy will only increase.
The best way to understand the importance of high growth is to use the example that the first Deputy Managing Director of the International Monetary Fund (IMF), David Lipton, gave on his CD Deshmukh Memorial Lecture last week. Lipton cited IMF calculations on how long it would take India’s per capita GDP to reach half the level of the United States. The answer depends on the growth rates. “With an average annual growth of 9%, it would take 15 years. With 7%, that would be 19 years. But with 5% growth, a little more than the fourth quarter growth last year, it would be 23 years, “Lipton said. Clearly, India must do everything possible to ensure that our long-term growth remains as high as may be possible”. However, in a globalized economy, external factors also influence the growth performance of a country. And India is no exception. The global economy has not been able to recover its spirit even a decade after the financial crisis of 2008. Protectionism in developed countries, manifested in things like the US-China trade war and Brexit, threatens to weaken the winds of Queue to the economies of the global south of the advanced markets of the countries. Reconciling with the effects of climate change and sharing the costs of mitigating these effects is another major area of conflict.
Although the world is struggling to accept such structural challenges, there have been unforeseen interruptions. The spread of coronavirus in China is exactly that. While economists hope it will not cause long-term damage, the spread of the epidemic can cause disruptions in the supply chain and affect investor confidence. India cannot be complacent on the economic front, even if there is a short-term recovery.