A lower growth trajectory of 6 per cent to 6.5 per cent would be insufficient to meet the aspirations of millions of young Indians
India must sustain an annual growth rate of 7.5 per cent to 8 per cent over the next two decades to achieve its goal of becoming a developed nation, said Surjit Bhalla, economist and former executive director for India at the International Monetary Fund (IMF).
"You do that, you will reach developed country status," Bhalla noted at an event organised by Outlook Business, emphasising the importance of long-term economic expansion. However, he cautioned that a lower growth trajectory of 6 per cent to 6.5 per cent would be insufficient to meet the aspirations of millions of young Indians.
“If you don’t achieve that pace, you are not going to achieve Viksit Bharat. You are not going to be able to satisfy the dreams and aspirations of young Indians who are actively contributing to the country’s development,” he added.
Bhalla’s comments come amid ongoing discussions on India’s economic trajectory and the structural reforms needed to sustain high growth rates.
India’s real gross domestic product (GDP) grew at 6.2 per cent in the December quarter compared with September quarter's 5.6 per cent. Yet, the GDP growth rate for the current fiscal, as per the second advance estimates, is seen only marginally higher at 6.5 per cent as against the 6.4 per cent in the first advance estimates released in January.
One factor that holds back India's growth potential is the country's industrial policy, including measures affecting micro, small, and medium enterprises (MSME). It is not shaped by elected officials but by unelected individuals, Bhalla said.
“The policy is not made by politicians, even though every policy must be authorised by elected officials like the finance minister or commerce minister,” Bhalla added. He argued that while ministers formally approve policies, the real decision-making power lies elsewhere—a structural issue that, in his view, needs to change.
His comments at the event designed to empower the MSME sector highlight concerns about the policymaking process in India, particularly its impact on businesses and economic growth.