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

Arvind Subramanian, former Chief Economic Adviser to India and Senior Fellow at the Peterson Institute for International Economics, said on Wednesday that India’s growth is not as strong as headlines suggest.

“Because when you look at all the other indicators, private investment has been flat for a very long time. Foreign Direct Investment (FDI) is falling. Consumption growth is weak. So a number of indicators are showing that the economy is perhaps not as strong as the headline figures suggest,” he said at an event to celebrate the launch of his book. The Sixth of Humanity: Development Odyssey of Independent India, Written with Devesh Kapur, Starr Foundation Professor of South Asian Studies at Johns Hopkins University.

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

Responding to a question from former RBI Governor and Governor MIDS Duvvuri Subbarao, Mr. Subramanian said there is a view that the service sector will be the engine of growth.

“Even if a service-oriented model is successful, it will provide growth and opportunities for 1% to 2% of the workforce. When we talk about AI, it is actually a double whammy for India because it is replacing or threatening to replace exactly such tasks like coding, where we now have a competitive advantage,” he said.

“India needs to revive production. A China plus strategy (those who want to have a supply chain outside China) was providing this opportunity until the Trump tariff came. A solution to the tariff problem will be found. China’s share in low-skilled global exports is 45-50 percent, while India’s share is 3-4 percent. There is no reason why India’s share cannot be increased to 10-12 percent. This will accelerate inclusive growth,” he added.

Speaking at the event, Soumya Swaminathan, President, MS Swaminathan Research Foundation, said: “While life expectancy has increased significantly, what has not improved is healthy life expectancy. This ultimately means that there is a huge burden on the individual, the family and the healthcare system due to the burden of disease. This means that the focus should be on prevention, which essentially means providing clean air, clean water, sanitation, nutritious nutrition and good shelter.”