India’s growth momentum is intact despite global challenges

The Economic Advisory Council to the Prime Minister (EAC-PM) is hopeful that India’s growth rate will be closer to 6.5 per cent even as the International Monetary Fund lowered the country’s growth projection to 5.9 per cent earlier this month from 6.1 per cent. Speaking to India Narrative, EAC-PM Member Sanjeev Sanyal said that despite emerging external challenges, India’s growth momentum has remained intact. 

The IMF projection is significantly lower than the Reserve Bank of India’s (RBI) estimate of 6.5 per cent for the current financial year.

“There is a great deal of stress in the global economy. Therefore, the multilateral agencies have lowered global growth projections. India’s growth rate continues to be fairly strong,” Sanyal said.

“I still feel the growth rate will be around 6.5 per cent,” he said, adding that this will be a creditable achievement amidst the growing risks.

Sanyal said that though there are apprehensions of an El Nino condition arising this year, India with its adequate food stock is better prepared to handle the impact in case the situation arises. “However, let us see how it plays out, the IMD (India Meteorological Department) has also predicted near normal rainfall this year,” he said.

A recent RBI paper said that India is expected to be among the fastest growing major economies of the world, accounting for 15 per cent of global growth – the second largest contribution, and higher than that of the US and EU put together.

“Although too early to tell, most recent data arrivals suggest that multilateral institutions – the IMF, in particular – might encounter forecast errors, with actual outcomes surprising them positively,” the central bank said.

In an interview to PTI, Anne-Marie Gulde-Wolf, Deputy Director for Asia and Pacific Department, IMF, said that the Indian economy continues to perform well and remains the fastest growing Asian economy, and one of the fastest growing in the world.

Meanwhile, policymakers will heave a sigh of relief as India’s retail inflation for March slipped below the RBI threshold of 6 per cent to 5.66 per cent—the lowest since December 2021.

The State Bank of India pegged the inflation measured by consumer price index for the current financial year at 5.2 per cent. In the first quarter, the inflation rate is projected to clock 5.1 per cent followed by 5.2 per cent in the second. In the third quarter it is projected to be 5.3 per cent while in the January to March period of the current financial year, it is expected to come down to 5 per cent.

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