“There are also likely spillovers from central bank tightening in advanced economies”
“There are also likely spillovers from central bank tightening in advanced economies”
Chief Economic Adviser V Anantha Nageswaran said on Wednesday India’s growth is expected to come in at between 7% and 8.5% amid global uncertainties.
The International Monetary Fund recently cut its growth forecast to 8.2%, higher than the Reserve Bank of India’s 7.2%.
“The range of results is quite wide. Bigger than it could ever be, and that makes the decision-making all the more risky. You need a lot of luck to get it right,” he said at an event here.
According to the economic survey, the Indian economy is expected to grow by 8-8.5% in the fiscal year starting April 1st.
The CEA said it had a conversation this afternoon with Fitch Ratings, which had forecast an 8.5% growth rate for India.
Although they have a negative outlook on India with a minus BBB rating, they have a forecast of 8.5% real GDP growth for 2022-23, he added.
“Well, the reality could actually be somewhere in between that 7-8.5% range. We will assume that under the current circumstances because the uncertainty of how long this current conflict in Europe would last and what impact it would have on not only the price of hydrocarbon fuel but also fertilizer prices, food prices etc. is quite difficult to assess at this time “, he said.
Spillovers from tightening monetary policy by central banks are also likely in advanced economies, he added.
The RBI raised interest rates by 40 basis points (bps) to 4.40% on Wednesday after an unscheduled MPC meeting in a bid to stem inflation, which has been stubbornly above the 6% target for the past three months.
The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, also increased the amount of deposits banks need to hold a cash reserve by 50 basis points to 4.5% in order to suck 87,000 crore of liquidity out of the banking system .
This is the first rate hike since August 2018 and the first time the MPC has unscheduled the repo rate hike.
V. Anantha Nageswaran | Credit: SUSHIL KUMAR VERMA
