India must grow at least 8-10% per year for next 25 years, says Singapore central bank head

Singapore Senior Minister Tharman Shanmugaratnam (REUTERS/Rogan Ward)

India must grow by at least 8-10 percent per year for the next 25 years if it wants to achieve its social and economic ambitions, Tharman Shanmugaratnam, senior minister in the Singapore Cabinet and chairman of Monetary Authority of Singapore, said on July 8 while delivering the inaugural Arun Jaitley Memorial Lecture.

"India is not going to be able to achieve its economic and social ambitions in the next 25 years without substantially higher growth ambitions. India must grow by at least 8-10 percent a year over the next 25 years. It is the only way in which it is going to be able to both lift per capita incomes as well as create many more jobs," Shanmugaratnam said in the Capital.

In addition to just faster growth, Shanmugaratnam said India must also implement reforms at a faster pace and ensure the rapid growth is inclusive.

"India has greater opportunity than any other major nation in the next 25 years. But realising the opportunity will require higher ambition – higher ambition in growth, higher ambition in social inclusivity, and higher ambition in developing sustainable society and economy. It also requires greater urgency; India will have to accelerate the pace of reforms than has been started and reorient the role of government," the central banker said.

Shanmugaratnam's comments come at a time when the global economy faces increasing risks of falling into a recession. At the same time, while India continues to grow quickly after a pandemic-hit contraction in FY21, growth is slowing down noticeably.

While India's GDP growth jumped to 8.7 percent in FY22 thanks to a favourable base effect, it is forecast to fall to 7.2 percent in FY23 and closer to 6 percent in the medium term.

As per recently released data, India has never hit double-digit growth when it comes to real GDP. The 8.7 percent growth posted in FY22 is India's fourth-highest since 1951-52. The highest rate of growth of 9.6 percent was recorded in 1988-89.

Responding to Shanmugaratnam's remarks in his address, Prime Minister Narendra Modi said the government's mantra of 'sabka saath sabka vikaas' reflected its desire to combine growth and inclusion.

He added that while previous Indian governments had undertaken reforms out of compulsion, the current administration did so out of conviction.