Chief Economic Adviser Sees Opportunity For India In Coronavirus Outbreak
The coronavirus outbreak in China provides an opportunity for India to expand exports, Chief Economic Adviser Krishnamurthy Subramanian said on Wednesday.
India is one of China's leading trade partners in Asia and has a huge trade deficit with that country.
"It's very hard to say how this will manifest in terms of India's trade relations with China. If we go by the experience of SARS (outbreak), India was not affected that much," Subramanian said at the Indian Institute of Management-Calcutta. "But, the coronavirus outbreak in China provides a good opportunity for India to expand trade and follow an export-driven model."
He said China imports a lot of components, parts, assembles and integrates and then exports them.
"India has been following the same pattern in terms of mobile manufacturing in the country. So, if one looks from this perspective, it provides a good opportunity for India," Subramanian said.
Talking about gross domestic product, Subramanian said the economic survey has projected it to be in the range of 6-6.5 percent in the next fiscal.
"This has been done by collating many pieces of evidence using business cycles which prevailed in India," he said, adding, the Union Budget has laid emphasis on rural consumption and capital expenditure.
"In any economy, you don't get growth rates that are constant. We need the average to be in that range," he said.
The Indian economy is projected to grow at a real economic growth rate of 5 per cent in the 2019-20 fiscal, the CEA said.
On fiscal deficit, he said the Fiscal Responsibility and Budget Management Act specifies its limit, which also provides an "escape route" within 50 basis points.
Subramanian said the economic survey makes a delicate balance between spurt in growth and fiscal balance. "But, we said the country has to lean on growth."
Speaking on wealth creation, he said the government needs to withdraw from areas where there is no requirement for interventions like the Essential Commodities Act.
"That act was needed when there was ravaging famines and foodgrain prodution was low. This act is now anachronistic," the CEA said.
Commenting on the decline in Index of Industrial Production (IIP) numbers, Subramanian said "such volatility" will continue to exist, but the green shoots in the economy were undeniable.
India's industrial output contracted by 0.3 percent in December, weighed by a decline in the manufacturing sector, government data showed on Wednesday. It had grown by 2.5 percent in December 2018.