India’s economy is on track for 6.8-7 percent GDP growth in the current fiscal and would be able to weather headwinds “very easily” in 2023, Chief Economic Adviser V Anantha Nageswaran said on Wednesday. He said the momentum of economic recovery continues and GDP is on average at 2019-20 level. “Overall, real GDP growth in 2022-23 is on track to be in the range of 6.8-7 percent,” he said, adding that data on festival sales, PMI, bank credit growth and car sales showed that the economy has maintained momentum despite strong global headwinds, especially higher input costs and the tightening of monetary policy.
After 13.5% growth in the April-June quarter, economic expansion slowed to 8.4% in the July-September period. Growth in the first half of this fiscal period (April-September) was 9.7 percent. Economic growth in the last fiscal year (2021-22) was 8.5 percent. The IMF (International Monetary Fund) has predicted that the Indian economy will grow at 6.8 percent this fiscal, while the RBI pegged it at 7 percent.
“In an uncertain external environment and despite exports not doing as well as last year, domestic demand will drive GDP growth… Domestic inflation is expected to moderate further on easing commodity prices and expectations of a good rabi harvest,” Nageswaran said to journalists after GDP figures for the quarter for September.
Nageswaran said 2022 saw much tougher global economic conditions and said, “We should be able to navigate the global headwinds in 2023 much more easily”. He said the economy continues to recover from the pandemic and GDP levels are on average at normal levels between 2019-20 and the rate of capital formation was similar to the first quarter at 34.6 percent.
“Overall, India’s growth rate at the end of two quarters in real terms (is) 9.7 percent, and India’s growth trajectory exceeds that experienced by other countries… India’s growth becomes respectable in light of the commodity price shock. and the synchronized tightening of monetary conditions that continues in the developed and parts of the developing world, including our own,” Nageswaran said. India, like other countries, suffered a tightening of global financial conditions as well as a commodity price shock following the outbreak of the Russia-Ukraine conflict in February.
“India’s growth estimates, which were north of 8 or 9 percent at the start of the year, have come down to 6.8-7 percent as global growth has slowed and monetary tightening (is) still ongoing and export growth will not be able to contribute the same like last year,” added Nageswaran.
