Morgan Stanley has said that, if the Indian economy grows at 5 per cent in the era of deglobalisation, then it will be a significant achievement. Ruchir Sharma, chief global strategist, of the investment banking company said this on Saturday.
Addressing the FICCI annual convention, Sharma further said India hastily passed agriculture and labour reforms during the COVID-19 pandemic. “‘Our expectations have to be realistic. If we can grow at more than 5 per cent in a year, that is a significant achievement,” he said.
Sharma also noted that it is no longer feasible in the world of deglobalisation to grow at 7 per cent as exports cannot grow at 20 per cent or 30 per cent in a year, which was good in an era of globalisation. “So, for an economy like India’s, growth rate of 5 per cent will be pretty credible even in this era where I think emerging economies in general will make some sort of a comeback,” he added.
Sharma pointed out that there were about 100 economies that were growing at 7 per cent or more in 2007. “That has never happened in the history of the global economy. In the last decade, only 10 economies in the world have grown 7 per cent or more in any year,” he said.
Sharma also argued that if the population growth of a country is slowing, then that country can’t grow at the same pace as it did in the past. According to the RBI, Indian economy is likely to contract by 7.5 per cent, in 2020-21.
He also pointed out that intra regional trade is the lowest in South Asia compared to any sub-region of the world. Sharma pointed out that India has seen slight increase in exports since 2010. “The last decade was a lost decade for emerging economies. The only economy to have gained in the global share in the last decade was China,” he noted.
Growth projections for the country is widely divergent in 2020-21. The RBI has revised its growth projection for real gross domestic product (GDP) for 2020-21. The central bank now expects the GDP to decline 7.5 per cent in the year ending March 31, 2020, in an upward revision from its earlier forecast of -9.5 per cent.
Goldman Sachs expects India’s gross domestic product to contract 10.3 per cent in 2020-21 against a contraction of 14.8 per cent earlier forecast in September 2020. PTI
