NEW DELHI (TIP): India’s growth potential is much higher than seven per cent and can be eight to nine per cent, American economist Nouriel Roubini said on Saturday, pointing out that the reforms being undertaken by the Bharatiya Janata Party (BJP) government are in the right direction, but the passage is slow. Roubini pointed out that the Indian economic reform process was hurt by political opposition.
Speaking at a global business summit in New Delhi, Roubini pointed out that the Indian economic reforms process is hurt by political opposition. “Potential growth for India is much higher than seven per cent. It can be eight to nine per cent. The key thing for India is to continue what they are doing but the country needs to accelerate their pace of reform,” Roubini said.
India’s gross domestic product (GDP) growth for 2014-15 was revised to 7.2 per cent from an earlier estimate of 7.3 per cent by the Central Statistics Office on Friday. The government has forecast growth to range between 7 and 7.5 per cent in the current financial year. “Despite number of global economic headwinds, India’s economy remains strong, though the pace of growth should be stronger,” Roubini said.
The key economic reform of rolling out the goods and services tax (GST) has been stuck in the Rajya Sabha, blocked by Congress-led opposition.
Niti Aayog Vice-Chairman Arvind Panagariya, however, said that “GST will eventually be passed”. “If we stay on the reform path, there is scope for India to expand and touch even double-digit growth in the next three years,” added Panagariya.
Roubini, professor at the New York University’s Stern School of Business, said that India must clarify on the retrospective taxation issue to attract foreign direct investment.
“Many of the companies are concerned about retrospective tax, good infrastructure, and in India acquiring land is complicated,” he said, adding that land and labour reforms at the state level, if not at the central level, can help bring in more investment.
Panagariya said that although the Indian economy remains in good shape, exports were a matter of concern.