Despite global shocks, India can still achieve 7% growth in FY27: S. Mahendra Dev

Despite major shocks such as US trade tariffs, the war in West Asia and now the impact of El Niño on the monsoon, India's economy remains resilient and can still achieve 7% growth this year, Professor S. Mahendra Dev, chairman, Economic Advisory Council to the Prime Minister, said on Friday.

"Last year, many of the market economists, after the tariffs, said economic growth will be below 6%. We have achieved 7.7% last year. So, we have been maintaining more than 7%. And this year also, RBI said 6.7%, but I think we may achieve 7%," Dev said at the Business Today India@100 Summit.

The hope is to also maintain the fiscal deficit at 4.4% this year, he said.

How the war in West Asia pans out in the next few months and how crude oil prices, which have again touched around $93 a barrel, move, is something that will have to be watched out for, he noted. But should oil prices fall, India can have higher growth, he felt.

According to Dev, the investment rate needs to be increased to 25% and exports, too, need to be scaled up, and manufacturing will play a key role here.

"We are giving a lot of importance. In the last three years, the growth rate of manufacturing GVA (gross value added) is about more than 10%," he pointed out.

Dev stated that India's share globally has increased to 3.2% from 1.8%, contrary to many people believing that it has been stagnant.

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He feels manufacturing and services will be complementary and more manufacturing will also lead to growth of services.

India's focus on manufacturing and investment is happening at a time when artificial intelligence is also gaining massive traction around the world. Will technology have an impact on jobs?

Dev still believes that, on a net basis, there will still be a positive impact on jobs.

However, he feels the private sector needs to do the heavy lifting.

"The Government creates only 10% of the jobs. The 90% will come from the private sector. We are trying to do a lot of ease of doing business and other things to improve private sector investment," he stated.

Land and legal reforms were also needed at the state level, which would drive private investment, he said.

"Dispute resolution takes a lot of time. We should have a committee of judiciary and economists probably to look into how to increase private investment," Dev felt.

Dev also stressed the need to scale up skilling of the workforce so that many more people would get jobs.

A big problem today, he says, is the gap in terms of the supply of graduates and what kind of talent the industry actually wants.

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"There should be interaction between industry, academia and government to improve the skills," Das opined.

He notes that India missed the peak globalisation phase. But now, with protection gaining ground and geopolitical uncertainty also increasing, becoming atmanirbhar in manufacturing will be even more important.

He pointed to what he sees as the missing-middle problem that India faces, which needs to be addressed.

"We had many enterprises with less than 10 workers or 20 workers, or the large factories. So, there is a missing middle in the sense (factories with) 200, 300 or 500 which China, Vietnam have," said Dev.

He is hopeful that with land and labour reforms, companies can increase their scale over time.