“Market participants are not sure that this is why you are seeing the volatility. It is a bit early for us to talk with much specificity about the impact on the Indian economy. At the moment we don’t see it as something that will have an immediate and significant economic impact, but we will have to keep a close eye on this,” he said.
However, the government’s chief economist is otherwise optimistic about the Indian economy, arguing that demand is strong and private investment has picked up. “Private investment is not a question of if it will happen; it is happening. It is not something I look at as a future phenomenon. I look at it as a current phenomenon. In FY22 and FY23, private sector capital investment recovered. also gets a sense of it from the capital goods imports and capital goods data in IIP. In August, growth (in the IIP subset) was 12.6%, a nine-month high, indicating a recovery in capital formation,” he said.
The Center has tried to boost private investment and increased government expenditure to generate demand for steel, cement and other raw materials, which the government says has helped.
Nageswaran said the IMF projections for a five-year period indicate that the Indian economy will grow at about 6.3%, with nominal growth of about 10.5%. ‘Their forecast for the Indian economy on a five-year basis is much more constructive. They do not expect a massive depreciation of the rupee. They do expect the economy to be close to $5 trillion by 2026-2027. I would probably be a bit more optimistic about nominal GDP growth,” he said, adding that India will contribute more to global GDP growth in the coming years.
The CEA has identified rough and tighter global financial conditions as potential risks. “The price of crude oil clearly plays a role, and the second factor of course is that global financial conditions are becoming increasingly tight, not only as a result of interest rates, but also as a result of the stock markets, which are showing signs of not going anywhere and they have to find a solution. one way or another,” he said.
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