Chief Economic Advisor Nageswaran Believes India Could Grow At 6.5-7%

Chief Economic Advisor Dr V. Anantha Nageswaran on Tuesday said he believed that India's improved balance sheets and digital infrastructure, together, will add between 60 to 100 basis points (BPS) to India's potential GDP growth.

During the press conference on Economic Survey 2022-23, Nageswaran emphasised that India’s enhanced balance sheets and rapid work in the digital infrastructure sphere could mean that the country’s GDP may grow at 6.5-7 per cent as opposed to 6 per cent, which seems to be the pick for most international organisations watching the country’s growth.

The Chief Economic Advisor’s opinion was different from International Monetary Fund (IMF) predictions which pegged India’s growth to pick up to 6.8 per cent in 2024 after declining to 6.1 per cent in 2023. The IMF had said that the domestic demand despite external headwinds would help achieve this rise in growth rate in 2024.

“What is important is that we have a financial cycle that was disrupted in the second decade and that is coming back. We have the new development of public digital infrastructure that is adding another 30 to 50 basis points. So, together (improved balance sheets), these two developments add about 50 to 100 basis points to the trend growth, which many organisations pick for India at 6 per cent,” said Nageswaran.

He said that he was optimistic that India would grow at 6.5-7 per cent, without taking into account India’s export potential as the global economy is still rife with uncertainty.

“The growth rate could be around 6.5 to 7 per cent rather than between 6-6.5 per cent,” he said.

But during the press conference, Dr Nageswaran also mentioned that the potential of India’s digital infrastructure is yet to be studied formally in connection with how much it contributes to the economy’s growth.

Earlier on Tuesday, the IMF had projected the growth in China to rise to 5.2 per cent in 2023 before falling to 4.5 per cent in 2024 and eventually settling at below 4 per cent over medium term.

Meanwhile, IMF believes that global growth is due to fall from an estimated 3.4 per cent in 2022 to 2.9 per cent in 2023, then rise to 3.1 per cent in 2024.

Also Read: India's Growth Set To Decline To 6.1% In 2023 From 6.8% In 2022: IMF