Chief Economic Advisor KV Subramanian said on Thursday that it is very difficult to create a narrative that is different from the truth, PTI reported. His remarks were a possible reference to his predecessor Arvind Subramanian’s claim that the Gross Domestic Product growth rate between 2011 and 2017 was lower than what official figures showed.
“Let me tell you from my own observation that India is an economy where there are many many touch-points for policy and in the six months that I have been part of the government, I have been able to see it from close quarters because there are several touch points for policy,” KV Subramanian said when asked about the credibility of the government’s data. “It is very hard to try and create a narrative which is different from the truth.”
KV Subramanian also claimed that there are many economic indicators that contradict the claims of critics about the credibility of official data. He added that investment will be the key driver to boost economic growth. The Economic Survey, released on Thursday, has said India needs to grow at 8% annually if it wants to become a $5-trillion economy by 2024.
“Investment cannot go up unless the cost of capital goes down,” he said. “One key opportunity we have is that the cost of capital internationally is very low, liquidity is very high there and as a result, there is an opportunity for firms...to think about going and raising money abroad.”
KV Subramanian said the government is also thinking of liberalising foreign investment norms. The Economic Survey has said the government can ease FDI requirements to narrow the Current Account Deficit. The CAD increased from 1.8% of the GDP in 2017-’18 to 2.1% of GDP in 2018-’19.
The chief economic advisor said unemployment will reduce when investment increases. “When the economy is in a virtuous cycle, investment, productivity growth, job creation, demand and exports feed into each other and enable animal spirits in the economy to thrive,” he said. “In contrast, when the economy is in a vicious cycle, moderation in these variables dampen each other and thereby dampen the animal spirits in the economy.”