India's economy faces warning signs, says ex-CEA Arvind Subramanian
Former Chief Economic Advisor Arvind Subramanian thinks India's 7.4% GDP growth estimate for the year ending in March should be "read cautiously."
He points out that recent data doesn't clearly show the economy bouncing back and warns that matching this year's growth next year would be considered "fortunate" given rising global risks.
What's behind the concern?
Subramanian questions whether the government's optimistic numbers reflect reality.
He highlights three big threats: possible 50% US tariffs on Indian goods (because of Russian oil deals), Chinese exports flooding Indian markets, and public finances getting squeezed after GST cuts.
Plus, a low GDP deflator and slowing activity hint at deeper challenges.
What does he suggest?
He urges policymakers to stay flexible—especially with the rupee.
Subramanian says letting the currency weaken a bit could help Indian exporters since there isn't much room for more government spending.
Even though the rupee dropped about 5% last year, he feels the RBI is still too focused on controlling its ups and downs instead of letting it adjust naturally.