The Indian economy will grow at 7 per cent range in the current fiscal, said Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian said.
“We maintain our projection of a 7 per cent growth rate going forward. Given the reforms that have already been undertaken the effects will start showing after a lag. India will be able to maintain the ‘fastest growing economy’ tag ahead of China. We still have significant potential and scope to grow strongly given the reforms that have been undertaken,” Subramanian said.
The expectation is based on the effects of the strong structural reforms such as bankruptcy laws, Goods and Services Tax (GST), crackdown on shell companies and the fiscal prudence undertaken in the last five years, he said.
As an effect of these measures, the current economic slowdown will gradually be replaced by higher investment and consumption going ahead, Subramanian added.
The Asian Development Bank (ADB), the Reserve Bank of India (RBI) and the International Monetary Fund (IMF) have cut India’s GDP growth forecast to 7.3 per cent for 2019-20.
The Indian economy grew at 6.6 per cent in the December quarter, the slowest in five quarters, which prompted the government’s Central Statistics Office (CSO) to trim its 2018-19 forecast to 7 per cent from 7.2 per cent estimated the previous month.
The CEA responded to the current economic slowdown where he said the effect of investments would manifest on economic growth with a lag and in an election year, there is wait-and- watch mode by corporates before undertaking fresh fund infusion into businesses.
He said the economy had built-up excess capacity and the utilsation was below 80 per cent leading to an investment slowdown.