New Delhi: A member of Prime Minister Narendra Modi’s Economic Advisory Council (PMEAC), Rathin Roy, has said that the Indian economy was heading for a structural slowdown which may not be good going ahead.
Speaking to NDTV, Roy indicated that the Indian economy is running the risk of a structural crisis and could be caught in the “middle income trap” similar to Brazil and South Africa.
"We are heading for a structural slowdown. This is an early warning. Sicne 1991, the economy has been growing not on the basis of exports but on the basis of what the top 100 million of the Indian population wants to consume," he said.
Those 100 million or 10 crore Indian consumers who were "powering" India's growth story, he said, have started to plateau out.
This phenomenon is known as a middle-income trap.
The Monthly Economic Report of March 2019, published by the Ministry of Finance, was a precursor to Roy’s warning. It had also stated that “India’s economy appears to have slowed down slightly in 2018-19. The proximate factors responsible for this slowdown include declining growth of private consumption, tepid increase in fixed investment, and muted exports.”
When asked about the government's rhetoric that India is the fastest-growing economy in the world, he said, "India is the fastest growing economy in the world. But this is not the fastest growing economy in India's history. India is the fastest growing economy in the world because China is not the fastest growing economy. We are growing at 6.1-6.6 per cent. But this consumption slowdown is going to put that under threat. India will grow at 5-6 per cent, year-on-year for the next 5-6 years, but a time will come when that will stop."
When asked whether he was able to raise this matter with the government, he said he had been raising this issue at public forums.
Apart from a member of PMEAC, Roy is also the Director of National Institute of Public Finance and Policy.
