India will remain the fastest-growing major economy in the world.
That’s the Narendra Modi government’s outlook for Asia’s third-largest economy, despite the shock of demonstration and a range of uncertainties, both at home and abroad.
India’s real GDP growth will remain between 6.75% and 7.5% in the 2017-2018 financial year, the government said in its Economic Survey, an annual document that deciphers the state of the economy.
“Even under this forecast, India would remain the fastest growing major economy in the world,” the survey said, although the International Monetary Fund earlier this year estimated that China was growing faster than India.
In the current financial year, real GDP is projected to grow at about 7%, the survey added, significantly lower than the 7.6% growth the economy registered in 2015-2016.
In a rather professorial presentation after the survey was tabled in parliament, India’s chief economic advisor, Arvind Subramanian, emphasized that the projections of lower growth weren’t only because of the impact of demonetization. Strengthening oil prices, for example, are also a factor, according to the survey.
Quoting John Maynard Keynes and Amitabh Bachchan in quick succession, Subramanian underlined the Modi government’s ability to stabilize the economy and undertake key reforms, including getting the goods and services tax (GST) bill through parliament.
“Macroeconomic stability is easy to overlook and become complacent about,” he added.
The coming financial year won’t be particularly easy either. The economy will continue to deal with the effects of demonetization while also contending with a range of global uncertainties. The biggest international risks to the Indian economy that Subramanian listed out include rising oil prices, trade-related tensions between major economies, and growing protectionism.