CEA says more pvt investments can rev up economy

New Delhi: Private investments getting into higher gear can accelerate economic growth, Chief Economic Adviser V. Anantha Nageswaran said on Friday, after the central bank raised its GDP growth forecast for the current financial year to 7%, from 6.5% it had projected earlier.

After a three-day meeting that concluded on Friday, the six-member Monetary Policy Committee of the Reserve Bank of India left the policy repo rate unchanged at 6.5%, while lowering the inflation projection for Q3FY24 (September-December) to 5.4% from 5.6% earlier. It left the forecast for Q4FY24 (January-March) retail inflation unchanged at 5.2%.

Nageswaran said that it was good news that the range of outcomes RBI has forecast for economic growth rate was narrower than that of inflation.

“India’s growth engine can now become faster and accelerate if the much-awaited private capital formation kicks into higher gear,” he said at an event organised by industry chamber Federation of Indian Chambers of Commerce and Industry (FICCI).

Speaking about the country’s accelerating growth momentum, Nageswaran said that India’s economy had expanded at 9% in FY22, followed by a 7.2% growth in FY23 and that the RBI has now forecast a 7% growth in FY24. The central bank has also predicted an average of 6.5% growth for the first three quarters of FY25 beginning 1 April.

“If you look at their (RBI’s) projections for growth and inflation, the range of outcomes they have for GDP is relatively narrower. For inflation, the range is much wider--it ranges from 8% to 2%…which means they are far less uncertain about India’s GDP growth; they are relatively more uncertain about inflation relative to their baseline projection. It is a good news that they are relatively surer about India’s growth rate this year and next year,” the chief economic adviser explained.

He emphasised that India is the growth engine of the world, but cautioned against losing sight of the fact that India is still growing from a relatively smaller base compared to that of China and of developed economies.

“Therefore, it is natural that our growth rate will have to be higher than other leading emerging economies like China or advanced economies. we need to keep the perspective that we are still growing from a relatively smaller base compared to that of other advanced nations or China and therefore it should be higher. We should be concerned if it is not higher,” Nageswaran said.