Former policymaker says India must accelerate reforms, strengthen external balances and pursue trade agreements to maintain long-term economic momentum
India needs a more ambitious reform agenda and a clearer strategy to manage external economic challenges if it is to achieve its long-term growth goals, according to economist and former policymaker Montek Singh Ahluwalia. Speaking at an Idea Exchange session hosted by The Indian Express, Ahluwalia said the pace of economic reforms has slowed in recent decades despite broad political agreement on their importance.
Reflecting on India’s economic journey since the landmark 1991 liberalisation programme, Ahluwalia noted that successive governments led by different political parties have largely continued reforms initiated during that period. While measures such as Aadhaar and the Goods and Services Tax (GST) demonstrate policy continuity, he argued that gradual changes are no longer sufficient to meet the country’s future ambitions.
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Ahluwalia highlighted several strengths supporting India’s growth outlook, including favourable demographics, expanding digital public infrastructure, improving logistics networks and a strong private sector
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However, he said these advantages must be matched by policies that boost investment, productivity and competitiveness
He also stressed the importance of pursuing free trade agreements with major partners, including Europe and the United Kingdom, while ensuring domestic industries do not push policymakers towards overly rigid negotiating positions. Greater global integration, he suggested, would help strengthen India’s economic prospects.
Addressing external risks, Ahluwalia pointed to elevated oil prices and uncertainty surrounding global energy supplies. He warned that India requires a credible strategy to manage its balance of payments as higher import costs could place pressure on the economy. At the same time, he noted that a moderate depreciation of the rupee could support exports under current conditions.
He further expressed concern over weakening capital inflows, citing a decline in foreign direct investment and negative foreign portfolio flows. Rebuilding investor confidence and presenting a compelling growth narrative, he said, will be critical for sustaining India’s economic momentum in the years ahead.
