CEA Krishnamurthy Subramanian: “How is India going to grow to 5 trillion USD in 5 years?

The Indian School of Business (ISB) Office of Alumni Engagement, in partnership with Kellogg Public Private Initiative held a conversation between Prof Ben Jones of Kellogg and ISB Prof Krishnamurthy Subramanian, currently the Chief Economic Advisor (CEA) for the Government of India in The Global ISB Forum held at the Allen Center at the Kellogg School of Management at Northwestern University. The event was attended by Kellogg Faculty and Students, ISB Faculty and Alumni, and the Indian community in Chicago including senior officials from the Office of Consul General of India in Chicago.

Krishnamurthy Subramanian was tasked with answering one key question “How is India going to grow to 5 trillion USD in 5 years? The answer was largely by encouraging investment in the country. Investment as a % of GDP was 40% in 2008 and this has come down to 29% in 2018. This is worrying statistic for a growing economy. He identified three engines of to promote investment – land reform (land acquisition laws need reform), labor reform (ease labor laws to encourage employment),and power (price it better to provide access to encourage a more balanced growth across the country).

It was also stated that the country needs to start differentiating between pro-market and pro-business economies – we can do this effectively by allowing the market to determine which companies survive with minimal government interference in the form of bailouts. He stated that “Good policy is characterized by averages and aggregates and bad policy is characterized by anecdotes” When asked about nationalistic agenda in terms of protecting local businesses, he was strongly of the belief that globalization would be key to improving the productivity and performance of these businesses. He stated emphatically “It had been 30 years since liberalization, we need the businesses today to behave like independent 30-year-old adults”.

The ongoing trade wars could significantly impact India’s position in the global trade ecosystem. The country currently only holds 2% of the global trade market share and we as a country need to leverage these opportunities to grow this number, by making the companies more productive, reduce trade restrictions, and identifying gaps in the trade value chain that we can capitalize on.

Manufacturing incentivized by policies such as “Made in India” and agriculture by ensuring access to market for farmers are key sectors that are going to drive a significant portion of India’s growth over the next few years. Bala Palamadai, Founder & CEO of Biz of IT Innovations one of the attendees had this to say of the event, “Mr Krishnamurthy Subramanian’s insights gave great clarity and confidence that the government is very keen on addressing the needs of the Digital and Startup economy”.