Indian Economy To Grow At 6.5% Despite August Rainfall Deficiency: Chief Economic Advisor
V. Anantha Nageswaran, the Chief Economic Advisor, has stated that despite deficient rainfall in August, the Indian economy is projected to grow by 6.5 per cent in the current fiscal year. He noted that both the government and the Reserve Bank of India are closely monitoring food prices.
Nageswaran emphasised that the current economic momentum is not driven by price-related distortions, and thus, the growth projection of 6.5 per cent for the fiscal year remains robust.
Recent data showed that India's GDP grew at 7.8 percent in the April-June quarter of 2023-24, compared to 13.1 per cent in the same period last year.
While acknowledging that risks are evenly distributed around the 6.5 percent growth projection for FY2023-24, Nageswaran highlighted potential challenges, such as rising crude oil prices and geopolitical uncertainties. He also noted that tighter financial conditions due to ongoing monetary tightening could pose growth challenges.
Regarding food inflation, Nageswaran anticipated a decline due to preemptive government measures and the arrival of fresh stocks in the market. He mentioned that tomato prices are expected to decrease with the arrival of fresh stocks in early September, and increased imports of tur dal are likely to moderate pulse inflation. However, he cautioned that deficient rainfall in August could impact food prices, and both the government and the Reserve Bank are closely monitoring the situation.
Nageswaran expressed confidence that there is no imminent threat of inflation spiraling out of control, as specific commodities have been driving food inflation. He assured that both the government and the Reserve Bank are taking measures to ensure adequate supply and availability, moderating price increases.
Despite an expected shortfall in disinvestment, Nageswaran stated that there is no risk to the 5.9 per cent fiscal deficit target set in the budget.
Discussing the drivers of growth, Nageswaran highlighted that investment and consumer momentum will support strong growth prospects in the coming year. Private sector capital formation, supported by government capital expenditure, is already in progress, contributing positively to economic growth, employment, and household income.
