Cea expects India’s economic growth in the 7-8.5% range given global uncertainties
India is expected to grow in the range of 7-8.5% due to global uncertainties, chief economic adviser V Anantha Nageswaran said on Wednesday. He said the range of results is quite wide.
Speaking at an event, on the country’s economic growth, Nageswaran said: “The range of outcomes is quite wide. Wider than it could ever be and that makes decision-making all the more dangerous. It takes a lot of luck to get it right,” reported by PTI.
Recently, the International Monetary Fund cut India’s growth forecast to 8.2%, while Fitch predicted an 8.5% growth rate for the country. These are even higher than the RBI projection of 7.2% for India’s economic growth.
Nageswaran also spoke with Fitch Ratings this afternoon. He said that although they have a negative outlook on India with a BBB minus rating, they have a real GDP growth forecast of 8.5% for 2022-23.
So, the CEA said, “so the reality may actually be between that range of 7 to 8.5%. We’ll take that under the current circumstances because the uncertainty about how long this current conflict in Europe will last and to its impact would not only have on the price of hydrocarbons, but also on the prices of fertilizers, the prices of foodstuffs, etc. is quite difficult to guess at this stage.”
The CEO also pointed to some ripple effects that may also come from the tightening of monetary policy by central banks in advanced countries.
India’s economy is expected to grow by 8-8.5% in FY23, according to the Economic Survey.
In an unexpected move, RBI today raised the repo rate under the Liquidity Adjustment Facility (LAF) by 40 basis points to 4.40% with immediate effect. In addition, the standing deposit facility (SDF) rate is adjusted to 4.15%, and the marginal standing facility (MSF) rate and the discount rate are set at 4.65%.
Despite the hike in policy rates, RBI decided to maintain a dovish stance while focusing on pulling back the dovish to ensure inflation remains on target going forward while supporting growth.
Last month, in its Currency and Finance (RCF) for the year 2021-22, RBI said that “India is expected to overcome COVID-19 related losses in 2034-35”.
In the RCF report, RBI said that a sustained push in investment spending by government, the push towards digitalization and growing opportunities for new investments in areas such as e-commerce, start-ups, renewable energy and supply chain logistics could, in turn, help accelerate trend growth while bridging the formal-informal divide in the economy.