'India has to capture world markets to sustain 8-10 pc growth'
New York, Jun 2: India needs to capture some of the world markets if it has to sustain an 8-10 per cent growth rate over the next 20-25 years, a top planner has said but acknowledged that the country has been "slower" than others in entering into free trade agreements.
He made the remarks here yesterday at a discussion organised by the Asia Society Policy Institute on the two years of the Indian government responding to whether trade-led growth is a priority for the government.
Panagariya said the broader question is whether "outward orientation" is part of the government's strategy of development, adding that his push is in that direction. "I just don't see that if India is to try to sustain a growth rate of 8-10 per cent over a period of 20-25 years, it can't be done without actually capturing some of the world markets," he said.
He added that apart from liberalisation, India would also need to focus on "internal reforms" like trade facilitation, speed at which goods can move in and out of the country and the various clearances required.
He noted that India's internal goods market is less than USD 1 trillion while in the world market, merchandise exports stand at USD 18 trillion. He said that in China, wages have been rising over 10 per cent a year for more than a decade and currently, they are 2-3 times the wages in India on an average.
"Wages are likely to rise much faster than they will rise in India. Lot of labour intensive firms are moving out of China and India ought to be the natural destination for them," he added.
When asked if India could look at joining the Trans- Pacific Partnership, Panagariya said the TPP is not on India's horizon "at this stage".
"A lot of the things that India would need to do to be a member of the TPP remain to be done," like on intellectual property, government procurement and labour standards.
"These are all very integral parts of the TPP and India is below the standards that are required in the TPP in these areas," he said.
Referring to the H1-B visas, Panagariya said: "When you raise fees like this on a commitment in a way that effectively threatens to take away a concession that was actually given, then politically it does not generate a very good reaction on the other side".
His remarks came in the backdrop of the US raising the visa fees for the popular H-1B petitions forcing Indian IT companies to shell out at least an additional USD 4,000 per application under the new regulations that came into effect last December.