India’s economy has recovered fast from the pandemic-induced crisis, says Arvind Panagariya. A professor of economics and the Jagdish Bhagwati Professor of Indian Political Economy at Columbia University, Panagariya was the first vice chairman of NITI Aayog. In an exclusive interaction with THE WEEK, he talks frankly about the Indian economy. Excerpts:
Q/What is the current state of the Indian economy and where is it headed?
A/The economy has recovered speedily, with India’s growth rate in 2021-22 almost sure to be the highest [among major economies], just as the IMF forecast of October 2021 had predicted. Provided that Covid-19 does not force significant lockdowns, we can count on growing 7-8 per cent a year in the coming decade. If we do a few more key reforms, we can do better.
Q/Do you feel that the economy is moving on the right path? Prices have been steadily rising and inflation has surged.
A/Currently, inflation is well within the assigned target range (2 to 6 per cent). I do not think that the RBI has to begin tightening the moment it sees inflation exceeding the mid-point of the target range. In a developing economy in recovery, I am comfortable with inflation being in the 5 to 6 per cent range.
Q/What kind of steps should be taken in the budget to revive the economy?
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