Addressing a global conference on world trade at Columbia University, New York, NITI Aayog Vice-Chariman Arvind Panagariya said India should open up further and make business conditions better for investors as it was likely to be the "natural place" for global firms that would face the challenges of shrinking labour and rising wages in China over the next 10 years.
He said demographically the labour supply in China was now shrinking and the already high wages there were soon to rise even quickly. "This could lead global firms based in China to move out over the next decade and look for better markets." He said the scenario poses an "opportune time" for India. "These firms are going to go out of China. India is likely to be the natural place. So my pitch to Prime Minister Narendra Modi is that we ought to take advantage of this great opportunity, open up further, make business conditions better for the investors. That is ultimately going to be what will sustain growth in India over the next two decades," Panagariya said.
He said the pace of reforms in India slowed after 2004. Due to this, "India lost about 10 years time. It, however, did manage to grow rapidly on the back of the reforms that were done in 1990s and early 2000s," he said. Panagariya added, "India has been about 15 years behind. If you look at all the characteristics of growth, trade, India is about 15 years behind China. India's GDP is two trillon dollars today. This is where China was 15 years ago." Stressing on the openness of the "key policy lever", he cited the example of China. "Most countries don't have that kind of GDP. Openness is a very critical part of the Chinese growth experience and the massive poverty reduction that it brings about."
He stressed that openness is a "key policy lever" that leads to high growth in a country. He cited the example of China which lifted 700-800 million people out of poverty and became a "super-open" economy which today boasts of merchandise exports of 2.3 trillion dollars alone.
