5pc growth amid de-globalisation to be significant achievement for India

Morgan Stanley Chief Global Strategist Ruchir Sharma on Saturday said if the Indian economy grows at 5 per cent in the era of deglobalisation, then it will be a significant achievement.

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 subregion 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.