'Indian economy is on steady auto-pilot, ticks all the right boxes at this point,' says CEA
2 min read 25 May 2023, 12:27 PM ISTDue to the strong credit demand and softening crude oil prices, India can attain a 6.5 per cent of expansion in the current financial year, said the top adviser of the Finance Ministry
PremiumDriven by the strong credit demand and softening crude oil prices, the Indian economy can continue its path to attain a 6.5 per cent expansion in the current financial year, said Chief Economic Adviser V Anantha Nageswaran.
He also added that these indicators, along with an uptick in construction activity can shield the economy from slower global growth and weather-related risks.
Also Read: Fed in May saw uncertainty about need for more rate hikes, shows meeting minutes
The Bloomberg estimates indicated that the data, set for release next week, will show the economy expanded 7 per cent in the previous financial year. On the other hand, higher borrowing costs could have slowed some activity in the country. Despite these retarding factors, India continued to remain the world's fasted-growing major economy. With this pace of economic growth, India outpaced China and drew heavy foreign inflows in the equity markets.
Also Read: India's GDP crossed $3.5 trillion in 2022; bureaucracy to impact FDI attraction: Moody's
“In the economic survey we said 6.5% is our baseline with the downside risks more than the upside risks and we maintained it in the April monthly economic report," said Nageswaran, who advises Finance Minister Nirmala Sitharaman, and is the lead author of the government’s annual economic report card.
“Now I am incrementally, slightly more inclined to move to the neutral range, in saying risks to this number are evenly balanced in the kind of position I am willing to take," he added.
Also Read: Indian banking system remains stable, says RBI Governor
With this, he indicated that other than monsoon and geo-political risks, the Indian economy will be on a “steady auto-pilot" and “ticks all the right boxes at this point."
According to the data compiled by Bloomberg, factors like higher tax collections and booming services sectors helped India maintain its momentum. In contrast to higher tax collection, there was a decline in exports and imports, which can be a concern for the economy.
Nageswaran is hopeful that the data will show a positive outlook for the Indian economy. He also justified the fall in export and imports. He said the goods exports are falling due to a slump in global demand, whereas, the decline in imports is the result of lower crude oil prices.
The stable current account deficit and rising foreign exchange reserves are also going positive signs.
Inflation has slowed to an 18-month low of 4.7 per cent, but a hot summer, which could affect crops, is still a concern. Other inflation risks are volatile global commodity prices as India is a major importer of crude and edible oils. However, Nageswaran is confident that India can overcome inflation provided a fall in crude oil prices.
