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Eminent economists believe that Indian economy can grow by 7-7.8% this financial year on the back of better agriculture production and a revitalised rural economy amid global headwinds mainly due to Russia's invasion of Ukraine.

The Indian economy is currently facing multiple headwinds largely from external sources, eminent economist and BR Ambedkar School of Economics (BASE) Vice-Chancellor NR Bhanumurthy has said.

Observing that global inflationary pressures and the Ukraine crisis have brought in risks to the economy, which is otherwise strong with all the domestic macro fundamentals being well managed, Bhanumurthy said unlike advanced economies, India's Covid-19 stimulus measures, especially the fiscal policy interventions, are less inflationary and rather growth-enhancing.

Speaking to news agency PTI, he added, "With better agricultural production and revitalised rural economy India should touch 7 per cent growth in the current year despite global headwinds."

Nagesh Kumar, another eminent economist and Institute for Studies in Industrial Development (ISID) director, said the high-frequency indicators point to a robust growth momentum carrying through 2022-23 with a real GDP growth somewhere between 7-7.8%.

Guy Sorman, a French economist, said that India could be severely impacted by the high cost of energy and fertiliser imports.

"However, because India is still, largely an agricultural economy, the social impact of slower growth will be tempered by city workers going back to their village.

"This could increase agricultural production and grain exports," Sorman said.

Indian economy expected to grow by 7.5% this year: Modi

Prime Minister Narendra Modi earlier on Wednesday said that the Indian economy is expected to grow by 7.5% this year, which will make it the fastest growing major economy.

Highlighting the growth of India's digital economy, he said its value will reach $1 trillion by 2025 and that the government is supporting innovation in every sector.

The World Bank has cut India's economic growth forecast for the current fiscal to 7.5% as rising inflation, supply chain disruptions, and geopolitical tensions taper recovery.

The country's economy grew 8.7% in the last fiscal (2021-22) against a 6.6% contraction in the previous year.

In its third monetary policy of FY23, the Reserve Bank of India retained its GDP growth forecast at 7.2% for the current financial year, but cautioned against negative spillovers of geopolitical tensions and a slowdown in the global economy.

On high inflation, Bhanumurthy said, CPI inflation peaked in March 2022 and a large part of the CPI inflation in the last three months is driven by fuel prices. 

"Delayed transmission of domestic fuel prices and rise in global fuel and other commodity prices appears to have led to a sudden spurt in CPI inflation," he said, adding that recent policy measures, such as reduction in fuel taxes and hike in policy interest rates, should smoothen inflation and inflation expectations in the coming quarters.

India's retail inflation cooled to 7.04% last month, mainly on account of softening food and fuel prices as the government and the RBI stepped in to control spiralling price rise by way of duty cuts and repo rate hikes.

However, the inflation print stayed above the central bank's upper tolerance level of 6% for the fifth month in a row.

With agency inputs

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