Trade Agreements With US And EU Next Big Steps For India's Growth, Says Arvind Panagariya

On the occasion of Prime Minister Modi's 75th birthday, the Chairman of the 16th Finance Commission, Arvind Panagariya joined NDTV Profit to look back at, and laud the major economic reforms over the last 11 years. While the decade so far has been a "remarkable" period of transformation, the next big steps for India will be to secure beneficial trade pacts with the United States and the European Union, according to him.

Panagariya noted that while India has already inked some free trade agreements, the deals with the US and the EU will be "very big reforms", which will remove frictions in trade.

"You can move goods between the EU, United states and India once these agreements are in place without any friction... Therefore, what need now is a free trade agreement with these two nations," Panagariya stated.

This, he said, will place India in a very favourable position globally, "pretty much in a situation where China was around early 2000." The economist talked about how having as large a workforce as India does, of both skilled and less-skilled labourers, will help become "a home to many of the multinationals just the way China was in 1990s and 2000s".

The country would then be able to cover a whole spectrum of industries — from footwear, aircrafts and machinery to pharmaceuticals, Panagariya said.

Discussing other types of reforms, he said India would benefit more if it makes some labour and land reforms, since urban land is quite expensive in the country to set up factories.

Panagariya praised the reforms that have already taken place under the Prime Minister and said that an all-around progress has been made. Furthermore, he talked about how as an economist, looking at poverty rate is key in determining how healthy an economy is, and added that poverty across all castes and religions have come down under Modi's era.