'Indian economy looks reasonably strong, to grow very well by world's standard,' says FT's Martin Wolf in Davos

The Indian economy looks reasonably well and is likely to grow very well by the world's standards, said Martin Wolf, the chief economics commentator at the Financial Times. He said the results of upcoming elections won't have any "profound effect" on growth this year, but in subsequent years, they might be significant.

"I'm assuming because everybody tells me so that the prime minister (Modi) will be re-elected, in which case I assume we will get more of the same, which is reasonably satisfactory, and India will continue to grow reasonably well. By world's standard, very well," Wolf said while speaking to Business Today's Executive Director Rahul Kanwal on Tuesday on the sidelines of the World Economic Forum (WEF) 2024 in Davos.

"Somewhere between 5 and 7 per cent (growth), with measurement difficulties, of course, and that it will be steady as it goes," he said when asked about his views on elections' impact on the India story during a session powered by the Motwani Jadeja Foundation and conglomerate Partner-Darwin. 

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The IMF in December 2023 said India's growth is expected to remain strong, supported by macroeconomic and financial stability. It said real GDP is projected to grow at 6.3 per cent in FY2023-24 and FY2024-25. The global financial institution, however, said India has the potential for even higher growth, with greater contributions from labor and human capital.

This year, 70-plus countries including India, the US, and Russia will have elections later this year. When asked whether multiple elections will impact global growth, Wolf said the ones that matter are India and the US as he said the other countries are not going to be able to do very much.

"European countries, for example, they have very little fiscal manoeuvre and very little monetary policy manoeuvre. It's going to be decided by the central banks. In the case of the US and India, I would expect policy to try to be supportive. Biden can't do very much. However, he's not going to pass any big fiscal bills. He's in the hands of the Fed. India looks reasonably strong anyway. So I don't expect, the elections to have any profound effect on growth this year. In subsequent years, they might be significant," he said.

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On Economic growth in China, Wolf, who worked as a senior economist in the Indian Division of the World Bank in 1978, said that the GDP figures in China have always been doubtful. He said his sense is that China is growing somewhere about 4 per cent. "It could be lower than that, and we don't really know," he said.

"I think the really interesting question is the nature of the stimulus programmes China will bring to bear and how they affect the rest of the world. But it's clear that China slowed very sharp," Wolf said.  

Chinese Premier Li Qiang, who is also in Davos for the World Economic Forum's annual meeting, on Tuesday said that China's economy grew by about 5.2 per cent in 2023, better than the official target Beijing had set. "In the past year of 2023, China's economy has generally rebounded and improved," he said.