The Economics Show Martin Wolf talks to Arvind Subramanian: India, the next economic superpower?
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Jan 27, 2025 
Arvind Subramanian, former chief economic advisor to the Indian government, shares insights on India's economic ambitions. He critiques the government's investment climate, expressing concern about potential currency crises. The discussion highlights the challenges India faces in achieving high-income status by 2047 amidst declining investments and inadequate reforms. Subramanian emphasizes the importance of export-led growth and addresses the complex relationship between exchange rates and financial stability, questioning the sustainability of India's rapid growth trajectory.
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India's Economic Slowdown
- India's economic recovery post-COVID has decelerated, with declining private investment and FDI.
- The government seems bereft of ideas, and investor confidence is low.
RBI's Exchange Rate Policy
- The Reserve Bank of India's (RBI) move towards a fixed exchange rate and currency defense has tightened policy inappropriately.
- This has created a challenging situation as the dollar appreciates and outward pressures mount.
India's Potential Growth
- India's potential growth rate is lower than perceived, estimated at 3-4% per capita.
- This is due to stalled reforms, a difficult external environment, and data problems with GDP measurement.