Indian economy to grow 7-7.8% in FY23, despite global headwinds: Experts


New Delhi: The Indian economy is expected to grow by 7-7.8 per cent in the current financial year, mainly due to the ongoing Russia-Ukraine war, mainly due to agricultural production and revitalized rural economy, leading economists said.
NR Bhanumurthy, eminent economist and Vice Chancellor of BR Ambedkar School of Economics (BASE), said that at present the Indian economy is facing a lot of difficulties, mostly from external sources.
Noting that global inflationary pressures and the Russia-Ukraine war have brought risks to the economy, which is otherwise strong with all local macro fundamentals being well managed, he said that unlike advanced economies, India’s cowardly stimulus measures, especially monetary policy interventions, have kept inflation low. Is and is a growth enhancer.
“With better agricultural production and a revitalized rural economy, India should touch 7 per cent growth this year despite global headwinds,” Bhanumurthy told PTI.
Echoing similar views, eminent economist and director of the Institute for Studies in Industrial Development (ISID) Nagesh Kumar said that the high-frequency indicators show strong growth momentum with real GDP growth between 7-7.8 per cent during 2022-23.
Guy Sorman, a French economist, said the high cost of importing energy and fertilizers could have a serious impact on India.
“However, since India is still largely an agricultural economy, the social impact of slow growth will be calmed by the return of city workers to their villages.
“This could lead to an increase in agricultural production and grain exports,” Soram added.
The World Bank has slashed India’s economic growth forecast for the current financial year to 7.5 per cent due to recovery due to rising inflation, disruption in the supply chain and geopolitical tensions.
India’s economy grew by 8.7 per cent in the last financial year (2021-22) as against a contraction of 6.6 per cent in the previous year.
In its third monetary policy of 2022-23, the Reserve Bank maintained its GDP growth forecast for the current fiscal year at 7.2 per cent, but cautioned against geopolitical tensions and the negative spillover of the global economic downturn.
On high inflation, Bhanumurthy said, “CPI inflation peaked in March 2022 and a large part of CPI inflation in the last three months is due to fuel prices.”
“Delayed transmission of domestic fuel prices and the rise in global fuel and other commodity prices have led to a sharp rise in CPI inflation,” he said, adding that recent policy measures, such as reduction in fuel tax and increase in policy interest rates. , Inflation and inflation expectations should be eased in the next quarter.
Kumar noted that global headwinds of rising commodity prices pose a risk to the Indian economic outlook as CPI levels are high.
“However, I do not think India is moving towards stagflation, although the pace of growth seems very strong,” Kumar argued.
According to Sorman, inflation has become a global phenomenon due to poor financial management, oversupply of public spending (mostly justified to offset Covid-19) and low interest rates.
“The financial bubble is bursting everywhere. India is no different,” he pointed out.
Retail inflation eased to 7.04 per cent in May, mainly on account of softening food and fuel prices, as the government and the RBI took steps to curb rising inflation through duty cuts and repo rate hikes.
However, inflation remained above the Reserve Bank’s upper tolerance level of 6 per cent for the fifth consecutive month.
Asked whether India’s economy is in better shape than it was eight years ago, Sorman said Prime Minister Narendra Modi was chosen to fight public corruption and boost the Indian economy.
“Modi has, in part, fulfilled his agenda. Most Indians are better off today than they were eight years ago,” he said.

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