India’s economic growth continues to impress the global community, according to Krishnamurthy V. Subramanian, Executive Director at the International Monetary Fund (IMF). Subramanian, who was also India’s Chief Economic Advisor, highlighted the country’s robust public digital infrastructure and inclusive growth as key factors driving international appreciation.
“The world is bullish on India,” Subramanian remarked, pointing to India’s successful digital infrastructure. He noted that his colleagues on the IMF board frequently express admiration for India’s digital strides. Furthermore, the country’s commitment to inclusive growth over the last decade has been widely praised on the global stage.
India’s Growth Outlook Despite Challenges
Subramanian acknowledged a slight dip in India’s growth this quarter. He attributed the slowdown to factors such as a reduction in capital expenditures and impacts from election cycles, as well as a drop in exports. However, he believes this decline is temporary and expects the economy to recover soon.
India’s economic policies during the COVID-19 pandemic set it apart from other nations. While the rest of the world treated COVID as a demand-side shock, India addressed it as both a demand-side and supply-side challenge. This strategy allowed India to implement a mix of policies that protected the most vulnerable sectors of society.
India’s Economic Growth vs. Global Inflation Trends
Subramanian also praised India’s resilience in managing inflation. While many countries experienced inflation levels two to four times their historical averages, India’s inflation stayed close to its historical norms, remaining lower than many advanced economies.
The IMF Executive Director further emphasized that India’s productivity growth has accelerated since 2014. Total factor productivity growth nearly doubled from 1.3% per annum between 2002 and 2013 to 2.7% annually from 2014 onwards.
Entrepreneurship and Innovation Drive India’s Economic Success
India’s entrepreneurial ecosystem has also flourished. New firm creation has significantly increased since 2014, making India the third-largest entrepreneurial hub in the world. Innovation rankings have improved drastically, with India rising from 85th in 2015 to 39th in 2024. Additionally, India’s ranking in ease of doing business has seen a significant leap, from 140th in 2014 to the 60s in recent rankings.
In his new book, “India@100,” Subramanian discusses India’s ambitious goal of becoming a $55 trillion economy. To achieve this, he stresses the importance of growing the manufacturing sector and reforming attitudes towards wealth creation. Subramanian advocates for a mindset shift, where wealth creators are seen as crucial drivers of economic prosperity and job creation.
Subramanian argued that without wealth creators who invest in companies, there would be no job creation. He pointed out that the political rhetoric against wealth creators in India hinders economic growth and job creation, much like the American dream of wealth creation drives prosperity in the United States.
Subramanian concluded that India’s economic future depends on continued structural reforms, embracing wealth creators, and fostering entrepreneurship for inclusive growth.
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