CEA says more private investments will revive the economy

NEW DELHI: Private investments will accelerate economic growth, Chief Economic Adviser V. Ananda Nageswaran said on Friday as the central bank raised its GDP growth forecast for the current fiscal year to 7 percent from the earlier estimate of 6.5 percent. .

After a three-day meeting that ended on Friday, the Reserve Bank of India’s six-member monetary policy committee revised the policy repo rate to 6.5%, while the inflation forecast for Q3FY24 (September-December) remained at 5.4%. Earlier 5.6%. It left the forecast for Q4FY24 (January-March) retail inflation unchanged at 5.2%.

Nageswaran said the good news is that the RBI’s projected impact on economic growth is less limited than on inflation.

„If the much-anticipated private capital formation kicks into high gear, India’s growth engine can now accelerate and accelerate,” he said at an event organized by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Talking about the fast pace of growth in the country, Nageswaran said India’s economy expanded by 9% in FY22, followed by 7.2% growth in FY23 and RBI now forecasts 7% growth in FY24. The central bank has projected an average growth of 6.5% in the first three quarters of FY25 starting April 1.

“If you look at their (RBI) projections for growth and inflation, the range of effects they have on GDP is relatively narrow. As far as inflation is concerned, the range is much wider – it’s between 8% and 2%… meaning they’re much less uncertain about India’s GDP growth; They are more uncertain about inflation relative to their baseline forecast. „The fact that they are relatively confident about India’s growth rate this year and next is good news,” explained the Chief Economic Adviser.

He emphasized that India is the growth engine of the world, but cautioned against overlooking the fact that India is still growing from a small base compared to China and developed economies.

„So it is natural that our growth rate should be higher than other leading emerging economies like China or advanced economies. We are still growing from a small base compared to other advanced countries or China, so we have to keep the perspective that it should be higher. It is not higher. If so we should worry,” Nageswaran said.