Don’t lose export focus at the altar of import substitution, says FCC Arvind Panagariya
India must preserve its outward export-focused orientation and remain open to global markets for it to grow faster and move into a higher growth trajectory, Arvind Panagariya, Chairman of 16th Finance Commission has said.
This is even as the country had in recent years enhanced its focus on import substitution via Aatmanirbhar and Production Linked Incentives (PLI) to spur economic growth and employment.
Exiting this current phase of import substitution is going to be a challenge for a country like India, Panagariya said, in an exclusive interaction with Rahul Ahluwalia, Director at Foundation for Economic Development (FED), a think tank.
Panagariya said that the intellectual support for industrial policy and import substitution remains strong in India. And there are few champions of an outward export-focussed orientation, he noted.
“I fear that, in our case, exiting this new phase of import substitution will be a challenge,” he added.
Panagariya said that he has looked at successful countries such as Hong Kong, Singapore, Taiwan, South Korea, China, and India — that have had high-growth. “My conclusion is very clear — countries that have been open are the ones that have grown rapidly”, Panagariya said.
