The Indian economy expanded by a whopping 15 per cent ever year during the last five years! Sounds incredible?

Credible, says a Columbia University professor, if we measure growth in dollar terms. “During the last five years, the rupee has been appreciating about six-seven per cent on an annual basis. So if one does a calculation actually, in real dollars Indian economy has been growing at about 15 per cent in the last five years,” said Columbia University Professor Arvind Panagariya here on Friday.

This is incredibly high rate of growth, Mr Panagariya said, adding that if the country sustained it, it would emerge from being an about $1.2 trillion economy to $18 trillion economy in 20 years, bigger than the current size of the US economy. Currently, there is debate going on about whether the Indian economy can sustain this high growth rate, he said.

“I am on the side of Vijay Kelkar who is hopeful that we can maintain it. On the other hand, we have people like Shankar Acharya (former Chief Economic Advisor) who take a more pessimistic view,” he said.

Monetary policy

In real rupee terms, Indian economy grew by over 8 per cent during the last 5 years. Many experts have opined that growth would moderate this fiscal from 8.7 per cent last  year due to tight monetary policy to fight inflation.
Mr Panagariya was participating in a discussion on his book, “India:The Emerging Giant” at a Ficci function here.
He said unlike Africa and Latin America, India never had a sustained decline in income. “Three to four per cent growth was always happening in Indian economy,” Mr Panagariya added.