Indian financial system to develop by 7-7.8% in FY23 regardless of international headwinds: Experts – Times of India
NEW DELHI: The Indian financial system can develop by 7-7.8 per cent this fiscal on the again of higher agriculture manufacturing and a revitalised rural financial system amid international headwinds primarily because of the ongoing Russia-Ukraine warfare, eminent economists stated.
Eminent economist and BR Ambedkar School of Economics (BASE) vice-chancellor NR Bhanumurthy stated at current Indian financial system is going through a number of headwinds largely from exterior sources.
Noting that international inflationary pressures and the Russia-Ukraine warfare have introduced in dangers to the financial system, which is in any other case sturdy with all of the home macro fundamentals being properly managed, he stated in contrast to superior economies, India’s Covid stimulus measures, particularly the fiscal coverage interventions, are much less inflationary and fairly growth-enhancing.
“With better agricultural production and revitalised rural economy India should touch 7 per cent growth in the current year despite global headwinds,” Bhanumurthy advised PTI.
Echoing comparable views, eminent economist and Institute for Studies in Industrial Development (ISID) director Nagesh Kumar stated the high-frequency indicators level to a strong progress momentum carrying via 2022-23 with an actual GDP progress someplace between 7-7.8 per cent.
French economist Guy Sorman stated India might be severely impacted by the excessive value of vitality 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 might improve agricultural manufacturing and grain exports,” Sorman added.
The World Bank has cut India’s economic growth forecast for the current fiscal to 7.5 per cent as rising inflation, supply chain disruptions, and geopolitical tensions taper recovery.
India’s economy grew 8.7 per cent in the last fiscal (2021-22) against a 6.6 per cent contraction in the previous year.
In its third monetary policy of 2022-23, the Reserve Bank retained its GDP growth forecast at 7.2 per cent for the current fiscal, 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 home gasoline costs and rise in international gasoline and different commodity costs seems 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.
Kumar noted that the global headwinds of rising commodity prices do pose downside risks for the Indian economic outlook as the CPI levels are elevated.
“Yet, I don’t assume that India is heading in the direction of stagflation, provided that the expansion momentum appears fairly sturdy,” Kumar argued.
According to Sorman, inflation has become a global phenomenon, caused by unanimous poor money management, an excess of public expenses (largely justified to compensate for Covid-19), and low-interest rates.
“The financial bubble is exploding in all places. India will not be totally 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 stepped in to control spiralling price rise by way of duty cuts and repo rate hikes.
However, the inflation print stayed above the Reserve Bank’s upper tolerance level of 6 per cent for the fifth month in a row.
Asked whether India’s economy is in a better place than eight years ago, Sorman said Prime Minister Narendra Modi was selected to fight public corruption and stimulate the Indian economy.
“Modi has, partially, in fact, fulfilled his agenda. Most Indians are higher off in the present day than they have been eight years in the past,” he stated.