Growth in range of 7% perfectly good for India unless external envt improves: Sanyal

NEW DELHI: India should be satisfied with the current growth rate unless the external environment improves, Member of Economic Advisory Council to the PM, Sanjeev Sanyal, said on Wednesday, terming economic expansion in the range of 7 per cent perfectly good.

Sanyal further said it was necessary to protect the hard-earned macroeconomic stability.

"Now look, it is possible for us to hit double-digit growth, but I would actually be rather careful about it. This whole game is about compounding growth," Sanyal said while speaking at the Times Now Summit.

India's economy grew at better-than-expected 8.4 per cent in the final three months of 2023, logging the fastest pace in the past one-and-a-half years.

The growth rate in October-December helped take the estimate for the current fiscal to 7.6 per cent.

"We should not attempt to grow this economy by anything more than what it is growing now. "If the external environment does not dramatically improve, because what will happen then, is that our external accounts will begin to overheat, our inflation will begin to overheat and so on," Sanyal said.

He noted that the key is not to lose control of macroeconomic stability as it was a very hard-earned thing. "You can only generate very high rates of growth if the external environment is conducive, otherwise we should be satisfied with what we are doing or even something in the range of 7 per cent is perfectly good," Sanyal said.

According to him, India will choose stability over growth because this game is about compounding this growth rate over 25 years and in fact, 8.4 per cent in the final three months of 2023 is a wonderful surprise.

"Our own forecast was 6.5 per cent to 7 per cent. And if it grows at 7 per cent, we would have been perfectly happy," he said.

Commenting on a recent paper authored by Thomas Piketty, which suggested that inequality has increased in India, Sanyal said, "study which Piketty and company has done is actually utter garbage", and the country needs to celebrate its billionaires as done in the USA.

"Because in their own report, if you just read the small print at the bottom of their working paper you will know that ... the data they used to compare different periods are not comparable," he said.

While pointing out that these studies are funded by the Ford Foundation, the Rockefeller Foundation etc. Sanyal said these NGOs do not have problems as long as the billionaire is white.

"They have problems with brown billionaires," he said, adding that Americans celebrate and feel proud of billionaires like Bill Gates and Elon Musk.

Recently, a study done by Thomas Piketty (Paris School of Economics and World Inequality Lab), Lucas Chancel (Harvard Kennedy School and World Inequality Lab) and Nitin Kumar Bharti (New York University and World Inequality Lab) revealed that inequality in India has skyrocketed since the early 2000s, with the income and wealth share of the top 1 per cent population rising to 22.6 per cent and 40.1 per cent, respectively, in 2022-23.

"We are 1/3 of the world's population. 1/3 of the world's billionaires should live in India. That's our fair share," Sanyal said.

Responding to a question on former chief economic adviser Arvind Subramanian saying India's latest gross domestic product (GDP) numbers are 'absolutely mystifying' and difficult to comprehend, Sanyal said, "(these) maybe mystifying to him".

Buttressing his argument, he said just drive around any major part of India, you can see the construction of infrastructure, the construction of housing of offices.

"So the point of the matter is, it is visible. " You can have a debate about double deflation... I am willing to debate it and there are different stories on that. The fact of the matter is that India's economy is now growing at a very rapid pace should be visible," he said.

Subramanian had recently said India's latest GDP numbers are "absolutely mystifying" and difficult to comprehend.