Chief Economic Adviser V. Anantha Nageswaran on Friday said that the golden era of globalisation is probably coming to an end amidst geopolitical and policy uncertainties, which is one reason why growth has slowed.
India's economy is likely to expand by 6.3–6.8 per cent in the coming fiscal year, much lower than what is needed to achieve developed-country status. To stimulate growth, the country requires deregulation and reforms in areas such as land and labour, according to the government's pre-Budget Economic Survey.
"The era of globalisation is over… the tailwind of globalisation is becoming more of a headwind… there is geopolitical and policy uncertainty both on the investment front and on the trade side, and the growth projections also reflect that," he said in an interaction with PTI.
The state of the economy document, tabled in Parliament by Finance Minister Nirmala Sitharaman on Friday, indicated that India's world-beating growth is moderating and that more needs to be done to achieve the nearly 8 per cent annual growth rate required to meet the Viksit Bharat target by 2047.
The 6.3–6.8 per cent growth rate projected for the 2025–26 fiscal year, running from April 2025 to March 2026, compares with an estimated 6.4 per cent growth for the current fiscal year ending March 31—the weakest since the pandemic—and 8.2 per cent in the previous 2023–24 financial year.
"The golden era from 1980 onwards, which probably lasted until 2016, was a period of globalisation during which trade flows as a share of GDP increased, investment flows as a percentage of global GDP rose, poverty reduction occurred, and there was free movement of goods, services, and even people. However, that era is now drawing to an end."
He, however, expressed hope that other forces could come into play to provide a tailwind in the coming years.
"Right now, we are in a state of flux. That is something we must take into account in our planning and policy framework for growth, ensuring that India's aspirations are met given this global environment," he said.
The survey stated that India needs to grow at nearly 8 per cent annually over the next decade or two, and the investment rate must rise to 35 per cent of GDP from the current 31 per cent to achieve its long-term economic goal of becoming a developed nation by 2047.
The IMF has projected that India will become a USD 5 trillion economy by FY28 and a USD 6.3 trillion economy by FY30, with an annual nominal growth rate of 10.2 per cent in USD terms.
The report called on states to reduce the cost of compliance by liberalising standards and controls on businesses, as well as by cutting tariffs and fees. It also emphasised the need to reinvigorate internal engines of growth by enhancing economic freedom through deregulation.
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