Economy turns resilient as funds stay within the country: Expert

PUNE: One sign of the resilience of the Indian economy is that it has survived domestic and global shocks which earlier had created havoc.
Another indicator of the economy’s strength is that money is remaining within the country despite a liberalised economic scenario.
Narendra Jadhav, principal adviser, Reserve Bank of India, said during the era of controls around $5bn used to go abroad annually. Now, with fewer controls, inward remittances are rising and it is expected to be $20-25bn annually.
“Money is choosing to stay within the nation,� he said, pointing to the issue of coping with the problem of plenty. “We have learned a lesson — that when you have the strictest controls and closed-door policy — money flies out of the window. Open the door and more money comes in,� he said.
Mr Jadhav points to the measures which RBI plans to take to curb excess liquidity. This, he said was “a deviation from the past�, with the central bank inviting comments and suggestions on proposals.

Referring to the Goldman Sachs report on India, that it will be the largest economy by ‘50, Mr Jadhav said that the RBI has looked closely at that report and believes this could happen by ‘25 or ‘30. The demographic transition in the country will help this happen, when by ‘18, we will have the largest number of people at their most productive peak. India will be able to stay longer at the top of this curve, unlike China, which enforced a one-child norm.
However, for the potential in the country to be fully realised, we need a conducive legislative environment, he said. Mr Jadhav was speaking at a function at the Brihan Maharashtra College of Commerce on Saturday, organised as part of its on-going diamond jubilee celebrations.