India will still grow 6-7% in the upcoming fiscal year 2023-24 even if the economy may be affected by uncertain global conditions, ex Niti Aayog Vice President Rajiv Kumar he has said amid growing fears that the world is slipping into a recession.
Kumar further said that there is a synchronized recession in the US, Europe, Japan and also in China and that this could lead the world economy into a recession in the coming months.
“Fortunately, there is no such recessionary prospect in India, because although our growth may be negatively affected by global conditions, we will still manage to grow at 6-7% in 2023-24,” he told PTI in an interview.
On October 6, the World Bank projected a 6.5% growth rate for the Indian economy for 2022-23, a drop of one percentage point from its June 2022 projections, citing the deteriorating international environment, while the IMF projected a growth rate of 6.8% in 2022, compared to 8.7% in 2021 for India.
IMF chief Kristalina Georgieva said the global economy is shifting from a world of relative predictability to one of greater uncertainty.
In response to a question about high inflation, Kumar said that retail inflation will likely be in the 6-7% range for some time to come.
“After that, my estimate is that it should start to peak and then come down,” he said.
Kumar added that this depends a lot on world oil prices, as they may continue to rise due to the ongoing conflict in Ukraine.
“But otherwise, the internal drivers of inflation will cool down,” he said.
Indicating an easing of the price situation, retail inflation moderated to 6.7% in October, while the wholesale price index fell to a 19-month low, mainly due to subdued rates on food items.
The central bank is mandated to keep inflation at 4% with 2% up and down margins.
When asked about the impact of the weakening Indian rupee on the common man, former VP Niti Aayog said that the common Indian does not use many imported goods or services in their consumption basket.
According to Kumar, the rupee that is close to its real value is much better for the economy than the appreciated rupee and the depreciated rupee does not present much downside risk.
The rupee lost 6 paise to close at 81.74 against the US dollar on Friday.
On India’s widening trade deficit, Kumar said that with the negative export growth in October, it is clear that the country needs a real policy focus in this area on how to expand its exports of goods and services.
“We now need to formulate specific export promotion policies for each state. Because having a single export promotion policy for the whole country does not make sense,” he said.
Digging further, he said that like Punjab, it is a landlocked state and Tamil Nadu is a coastal state, and it has centuries of trading experience. “So having the same policies from both states, for example, is not relevant,” she emphasized.
India’s exports entered negative territory after a gap of about two years, declining sharply by 16.65% to $29.78 billion in October, mainly due to slowing global demand, even as the deficit business was expanded to $26.91 billion.
Imports during the month under review increased about 6% to $56.69 billion due to an increase in incoming shipments of crude oil and certain raw materials such as cotton, fertilizers and machinery.
In response to a question about some states switching to the old pension plan (OPS), Kumar said: “That’s a step backwards and I don’t think it should be taken.”
He opined that some opposition parties defend him due to the populist measures.
“I think the Indian economy, the Indian working class, the Indian middle class are maturing and can run their own pension funds and take advantage of the new pension scheme, which offers many more options than the old pension scheme,” Kumar said.
Punjab’s cabinet on Friday approved the re-implementation of the old pension scheme, which was discontinued in 2004.