New Delhi [India], November 12 : India's huge domestic market makes it much less vulnerable to external developments, as the country's economic strength lies in its scale, resilience, and demographic advantage, Aurelien Kruse, Lead Economist at the World Bank, toldin an exclusive interview.
"The tailwinds are the fact that India is a huge market already per se," Kruse toldon the sidelines of CareEdge Global's event "The Dialogue on Ratings and Economic Resilience - Building Global Confidence" on late Tuesday.
"So the type of vulnerability to external developments that small open economies will face in terms of uncertainty is much less binding for a country like India, which, by and large, has this huge domestic market and is therefore less exposed to global volatility."
Kruse said India's favourable demographics will continue to support strong growth in the coming decades.
"The working-age population keeps growing and will continue growing until about 2050 with a dependency ratio that's very favourable. That is a real asset for India and explains a lot of the growth," he said.
Kruse noted that both World Bank and IMF see India maintaining its leadership in global growth.
"The World Bank, like the IMF, are very consistent in their forecast that India remains, and by a wide margin, the fastest-growing large economy in the world," he said. "We forecast that India will grow anywhere between 6.3 and 7 percent over the foreseeable future."
Kruse explained that India's strong fundamentals include a large labour force, growing capital stock, and steady productivity, underpin this outlook.
"There's no reason for India to grow significantly below 6 percent just because it is such a dynamic economy," he said.
At the same time, he underlined that India's next challenge is to accelerate beyond this baseline. "The real question that is relevant for India is not whether we'll continue to grow at six, the question is what can we do to grow at ten," he said.
"That's where you stop to rely on your natural assets, your large working-age population, your capital stock, and you think about productivity, efficiency, and integrating into global value chains what will give you that delta from good to great."
Kruse said India's growing digital and innovation ecosystem is further driving productivity. "In many domains related to digital, for example, or global capability centers, India has been able to position itself as a hub for innovation and for dynamism that really feeds into the productivity of the economy," he said.
On the global trade environment, Kruse downplayed fears of major disruption. "Global trade is growing, it's not shrinking," he said.
There was COVID, where it was realized there were vulnerabilities inherent in integration, that countries had the need to de-risk from specific value chains or bilateral interactions, he said.Trade is growing; it's just not growing as fast as it used to.
Kruse said, "India should be more open to the world as opposed to less open to the world because it has so many advantages and cards in its hands that it can play."
He added that India's progress is clear. "When you're talking about a country that's growing at 6-7 percent, it's hard to tell that they're not doing the right thing. Obviously something is going right," he said.
He also referred to the World Bank's India Economic Memorandum, which proposes measures to help India "go from good to great" and achieve its Viksit Bharat goal.
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