“India is the champion of growth in G20 and continues to show a very strong and broad-based performance,” Pereira told ET in an interview. The Organisation for Economic Cooperation and Development (OECD) raised the country’s growth forecast to 6.7% for FY25 and 6.8% for FY26, a revision of 1 and 2 basis points, respectively, with an upside risk.
‘Significant Reforms’
“Solid domestic demand growth is projected to continue in India and Indonesia over the next two years,” OECD said in the September update of its economic outlook, released on Wednesday.
Pereira ruled out the risk of a middle income trap, saying India will keep driving strong growth as long as good macroeconomic management continues. “If India continues to grow 7%, for example—hopefully, it can grow even more—it means that per capita income will double every 10 years. So, it’s a fantastic rate of growth.”
The OECD chief economist said India is “one of the G20 countries that reformed the most over the past seven to eight years, liberalising many parts of the economy and introducing significant reforms in several sectors. This has led to a significant boost in investment and growth”. He also called ‘Make in India’, which completed 10 years of its rollout Wednesday, a significant reform that led to diversification of the manufacturing sector.
Noting that India needs to continue to improve ease of doing business, invest in skills, and cut red tape, he added, “The reform path we have seen in the past few years needs to continue, to attract more investment, both local and foreign, and make the country more integrated with global chains.”
According to Pereira, the economy must keep opening up along with infrastructure upgrade. He stated that risks for India were “fairly balanced,” even as they were tilted towards the negative in other parts of the world. He identified geopolitical factors and their impact on trade and the financial markets as concerns.
Turning a corner
World growth has been resilient, though Europe has not been doing so well, Pereira said, adding, “It is a picture of solid growth — resilient not stellar.”
OECD had forecast a growth of 3.2% for the world economy. The world has turned a corner, he said, with most central banks of now expecting headline inflation to come closer to target. OECD secretary-general Mathias Cormann said falling inflation provides room for easing of interest rates, though monetary policy should remain prudent until inflation has returned to central bank targets. He stressed on decisive policy action to rebuild the fiscal space by improving spending efficiency, reallocating expenses to areas that better support opportunities and growth, and optimising tax revenues.