India has shown remarkable resilience in recovering from a Covid-induced slump in growth, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Saturday. The country has also managed to keep price pressures under control at a time when even developed nations are struggling with runaway inflation, he added.
Speaking at an event on Indian Economy: Prospects, Challenges and Action Points at the Haryana Institute of Public Administration, the CEA stressed that the economy’s key indicators have exceeded their pre-pandemic levels. The latest GDP data showed that real growth in FY22 exceeded pre-pandemic (FY20) levels by 1.5%, private consumption by 1.4% and fixed investment by 3.8%. On an annualized basis, the economy grew 8.7% in FY22 versus -6.6% a year earlier.
“Today we are witnessing a strong revival of private investment and the country has comfortable foreign exchange reserves to withstand turmoil in the international foreign exchange market. The exponential growth of digital payments in India in recent years is indicative of rapid changes in the informal sector,” added Nageswaran.
The developed world moves from low to high inflation, and “at times like this we’ve managed to keep inflationary pressures under control,” Nageswaran said. For example, inflation in the US hit a new 40-year high at 8.6% in May. India’s retail inflation hit an 8-year high of 7.79% in April.
Swift and decisive policy interventions by the government, duly backed by central bank monetary policy measures, have enabled the economy to stage a smart recovery, the CEA said. With its strong fundamentals, the Indian economy is now in much better shape than many others, he added.
According to International Monetary Fund projections, India will become a $5 trillion economy by 2027, up from over $3 trillion now, Nageswaran said.
Earlier this week he had said that if the country’s dollar GDP doubled every seven years, India would become a $20 trillion economy by 2040 with a per capita income of nearly $15,000.
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