“It is a plausible aspiration for India to become a $10 trillion economy by 2030,” said Mr Subhash Chandra Garg, Secretary, Department of Economic Affairs, Ministry of Finance. He was addressing the 6th Growth Net Summit, organized by Ananta Centre, Confederation of Indian Industry and Smadja and Smadja in New Delhi.
He added that by emphasizing a ‘sustained’ average growth of 8% coupled with an assumed devaluation of Indian Rupee vis-à-vis US Dollar at Re 1 per year would likely take India to the stated target.
Mr Garg said that India is increasing its renewable energy capacity due to high focus on the sector. Stating that Finance and IT are India’s strengths, the Secretary noted that future growth will be driven by digital India which itself will be powered by clean energy.
On fiscal management, the Secretary felt that the government has worked in a very prudent and sound manner, adding that it has made it clear that the fiscal situation will not be allowed to deteriorate even though this is an election year. He said that India would shortly achieve the targeted 3% fiscal deficit level and that it will be more permanent and sustainable in nature.
On financial markets, Mr Garg said that the country has a reasonably developed equity market while debt market is still evolving and taking shape. Peer to peer lending is still low compared to developed economies and it is likely to grow going forward. Commenting on commodity markets, he said this still needs to develop further.
On the macro situation, Mr Garg said that tax to GDP ratio has improved from 10% to 11.6%, and fresh private capital investment is likely as capacity utilization has increased. On Capital Account Deficit (CAD), he said that India is capable of sustaining 2.0%-2.5% level, emphasizing that remittances are not included in calculations.
Commenting on the banking sector, ha said that great level of financialization of economy has happened since demonetization where mutual funds have become a major non-banking investor. He predicted that going forward, the economy will rebalance from bank based to financial markets based lending.
Mr Garg said that GST has changed the way corporates interact with the tax infrastructure. He expressed satisfaction on ‘job creation’ in the economy and highlighted that more needs to be done in infrastructure and manufacturing sector. He ended his address by urging the industry to ‘revive’ the animal spirits as the conditions are ripe for fresh capacity creation in the economy.
The session was chaired by Shri Uday Kotak, President Designate, CII and MD & CEO, Kotak Mahindra Bank Limited, who also urged the industry to shed any cynicism that they might have and contribute aggressively for the India growth story.