Economy On Track To Achieve 6.8-7 Per Cent Growth In FY23: CEA V Anantha Nageswaran

V Anantha Nageswaran's comments came after the latest data showed India's GDP growth more than halved to 6.3 per cent in July-September

The Indian economy is on track to achieve 6.8-7 per cent GDP growth in this financial year, said Chief Economic Advisor (CEA) V Anantha Nageswaran, on Wednesday. Nageswaran's comments came after the latest data showed India's GDP growth more than halved to 6.3 per cent in July-September. The CEA said that he is more optimistic about the growth than many global agencies have forecast for India for the upcoming FY24.

“Q2 GDP was in line with most market participants’ expectations. In 2022-23, the economy is on track to achieve 6.8-7 per cent growth,” Nageswaran said.

He added, "And we can look ahead - as capacity utilisation rate picks up, as capital formation maintains its buoyancy, tax revenue growth indicates the vigour of economic activity, etc - to India building on its growth recovery further in 2023-24 as well."

On global agencies’ projections on Indian economic growth, India’s top economist explained, “India’s growth as estimated by most global agencies is based on the recent data of 2019-2020, and then 2021 onwards continues to rely on the lower capital formation… The fact that both financial and non-financial sectors have improved their balance sheets is not well factored in agencies’ forecasts… Besides, digital infrastructure has also played an important role in formalising the economy and providing better financial access to many excluded sectors -- that too is not accounted for.”

While the RBI estimated economic growth at 7 per cent, the IMF had projected the Indian economy to grow at 6.8 per cent in FY23.

On inflation, Nageswaran said that the RBI expects the rate to ease to the target range in the third quarter of this fiscal year, and decline even further in the last quarter of FY23. He was also hopeful about the corporate earnings outlook as price pressure moderates and supply chains improve.

To demonstrate that the domestic economy was doing well, Nageswaran pointed toward several indicators, such as credit growth. "It (credit growth) is not just concentrated in one sector. Credit to MSMEs is particularly strong and that is gratifying… Clearly, there is a very strong momentum in credit growth and the demand from credit coming from all sectors points to continued economic momentum and growth continuing," Nageswaran said.

On the decline in manufacturing, he said, "It will see a rebound in the numbers in the third quarter, while PMI indices will maintain expansionary trends."