According to economist and former Economic Advisory Council member Surjit Bhalla, India's economy is experiencing a paradoxical situation where 6% growth masks a standstill in ambition. Speaking exclusively to ANI, Bhalla explained that while the country maintains robust economic performance, there is 'no ambition. There is no drive to go forward'. He characterized the current situation as 'a standstill with a 6% growth', emphasizing that despite achieving healthy growth rates, India lacks the competitive drive necessary to advance its economic goals. Bhalla noted that 'We are doing well, but we are all very comfortable with what we have achieved' and warned that this complacency represents a fundamental barrier to achieving India's vision of becoming a developed nation. The economist, who served as a part-time member of Prime Minister Narendra Modi's Economic Advisory Council, highlighted that while many expected India to emerge as the primary beneficiary of the 'China plus one' strategy, the country was effectively 'outpaced by its neighbours'. As reported by ANI, he remarked that 'Vietnam and Bangladesh had our breakfast', citing Vietnam's aggressive pursuit of foreign investment through tax incentives and swift integration into global supply chains.
The economist highlighted that India's manufacturing sector remains trapped in a cycle of stagnation due to government protectionism that has disincentivized corporations from taking the risks necessary for global competitiveness. According to ANI, Bhalla pointed to a 'standstill with a 6% growth' and questioned why 'industrialists not taking risks? Look at the protection we provide them'. He argued that 'The key element about the Indian system is why it is at a standstill' and emphasized that the current policy environment shields companies from competitive pressures. Bhalla noted that while Indian firms possess healthy balance sheets, they remain reluctant to commit to large-scale manufacturing investments, describing this hesitation as a 'rational response to a policy environment that shields companies from competitive pressures'. Reflecting on the manufacturing sector's long-term share of GDP, which has hovered between 13 and 15 per cent for decades, Bhalla warned that complacency is the primary barrier to India's vision of becoming a Viksit Bharat (developed India).
Bhalla specifically questioned existing tariff structures that reduce the urgency for domestic manufacturers to become globally competitive. According to ANI, he highlighted 'a 25 per cent duty on polyester' as an example of protectionist measures that discourage competitive development. The economist argued that these measures create a 'protection we provide them' that eliminates the natural competitive pressures that drive innovation and efficiency. He contrasted India's approach with the 'East Asian miracle' model, pointing to South Korea's historical success where 'The government said, 'Go forth and export.' If you are competitive, we will back you with subsidies. If you are not competitive, you are out'. By contrast, Bhalla felt India failed to demand similar export-oriented performance from its own industrialists. He emphasized that 'The key element about the Indian system is why it is at a standstill' and questioned why 'industrialists not taking risks? Look at the protection we provide them'. Bhalla noted that while Indian firms possess healthy balance sheets, they remain reluctant to commit to large-scale manufacturing investments, describing this hesitation as a 'rational response to a policy environment that shields companies from competitive pressures'.
When asked about policy recommendations for achieving India's vision of becoming a developed nation, Bhalla emphasized the need to 'move away from protective blanket policies and towards a system that rewards competitive efficiency, encourages exports, and compels industry to embrace the risks inherent in a globalised economy'. As reported by ANI, he maintained that 'The path forward is clear: move away from protectionism to reward competitive efficiency, encourage exports, and compel industry to embrace the risks inherent in a globalised economy'. Bhalla reiterated that if India intends to achieve developed economy status by 2047, it must expand its focus beyond the domestic market and deepen its engagement with the global economy, emphasizing that such fundamental policy shifts would be necessary to unlock the country's higher growth potential. He contrasted India's approach with the 'East Asian miracle' model, pointing to South Korea's historical success where 'The government said, 'Go forth and export.' If you are competitive, we will back you with subsidies. If you are not competitive, you are out'. Bhalla insisted that hitting higher potential growth targets will require a fundamental shift in policy, moving away from protectionism to reward competitive efficiency and exports.
