India’s top economist and Executive Director at the International Monetary Fund (IMF), Krishnamurthy V Subramanian, has stated that the global community is increasingly optimistic about India’s economic future, praising the country’s public digital infrastructure and inclusive growth model.
In an interview with PTI, Subramanian emphasized that India’s economy has been growing steadily, with a consistent growth rate of 7 percent post-COVID, despite a slight dip in recent months. The dip, according to him, is largely attributed to a slowdown in capital expenditures and the impact of election cycles, as well as a decline in exports. However, he expects this to be temporary.
“From the vantage point that I’ve been sitting on the IMF board, I have no hesitation in saying the world is bullish on India,” Subramanian told PTI. “The kind of public digital infrastructure that India has enacted is something that almost every one of my board colleagues often mentions with sincere appreciation. Apart from that, the inclusive growth India has pursued over the last decade is also widely acknowledged,” he added.
Subramanian also pointed out that India’s economic policy during the COVID-19 pandemic was distinct from the rest of the world. While other countries viewed the pandemic as purely a demand-side shock, India recognized it as both a demand-side and supply-side issue, leading to a balanced approach with judicious spending. This, he explained, helped India avoid the substantial inflation seen in advanced economies due to supply-side problems arising from the European war.
“While in the rest of the world, countries have faced inflation levels two to four times their historical averages, India had inflation lower than its historical average,” Subramanian stated. “This was primarily due to responsible fiscal policies during the COVID period, contrasting sharply with the rest of the world.”
Looking at productivity, Subramanian highlighted India’s improved growth rates. From 2002 to 2013, total factor productivity growth averaged 1.3 percent per annum, but from 2014 onwards, it has more than doubled to 2.7 percent per annum. He also noted a significant increase in new firm creation, which has surged since 2014. This has contributed to India’s emergence as the third-largest entrepreneurial ecosystem globally.
Subramanian also drew attention to India’s rise in global innovation rankings. In 2015, India was ranked 85th, but in 2024, it has moved up to 39th. He expressed a desire for India to break into the top 20, calling this improvement “noteworthy.” Similarly, India’s ease of doing business ranking improved from 140th in 2014 to the 60s in recent years.
“These are clear indicators of significant vibrancy in the economy, driven by structural reforms since 2014,” Subramanian said.
In his book India@100, Subramanian envisions India becoming a $55 trillion economy. To reach that goal, he stressed the importance of boosting manufacturing sector growth, as this is critical for job creation and inclusive growth.
Subramanian also called for a shift in mindset regarding wealth creators in India. “In the United States, becoming wealthy is treated as the American dream. India needs to understand that wealth creation is critical for job creation,” he said. He pointed out that every job in the economy exists because of someone who invests wealth in creating companies, which in turn generate employment.
“This fundamental aspect of reform is critical to understand. Without wealth creation, there is no job creation,” he concluded.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
