Arvind Subramanian, a former chief economic advisor, emphasized that India needs to "disabuse" itself of the notion that it is a large market.
Speaking at the India Today conference was Subramanian
In response to a query from a credible channel, which was whether or not India was a large enough market for manufacturing. He said that the nation was making a catastrophic error of judgment by expecting it could expand solely on the home market.
"China, Vietnam, and Bangladesh were the only post-war nations to never attain 7-8% growth without a 15% increase in manufacturing exports. And the local market does not provide that," he remarked.
Also "mystifying" to Subramanian was the government's GDP. "The most recent GDP figures are confusing and difficult to interpret. They don't stack up. For instance, the government's implied estimates of inflation range from 1.5% to 1.5%, but the real inflation rate is closer to 5%."
Not only that, but private consumption was only growing at a rate of 3%, whilst the economy was expanding at a rate of 7.5%. According to the most recent GDP figures, the Indian economy expanded at a six-quarter high of 8.4% in the third quarter of the 2024 fiscal year. Additionally, the GDP estimates for the first and second quarters of the current fiscal year were changed from 7.8% and 7.6% to 8.2% and 8.1%, respectively.
In addition, Subramanian, who was the chief economic adviser from October 2014 to June 2018, said that FDI has dropped precipitously during the previous two or three quarters. Not only is FDI falling in India, but the country's proportion of FDI moving to emerging markets has decreased as well. Thus, the issue is, why isn't there more FDI into India if it has become such a desirable destination for investments? Also, corporate investment is far lower than it was in 2016," he stated.
