NEW DELHI: Chief Economic Advisor V Anantha Nageswaran on Wednesday said medium-term fundamentals of the economy remain solid and India is much better placed than many other countries in the world to face current challenges.
Speaking at the finance ministry's iconic week celebrations of 'Azadi ka Amrit Mahotsav', Nageswaran said India has emerged out of the previous decade with its financial system well repaired, improved, and strong balance sheet.
The CEA said, this year India will be facing challenges of managing a sustainable high growth, moderating inflation, keeping fiscal deficit under balance and also ensuring that the external value of the Indian rupee remains same.
"We need to understand that the medium-term fundamentals of the Indian economy remain solid and the Indian economy is much better placed than many others in this world to face the challenges that we are currently encountering," Nageswaran said.
He said there could be no "pre-programmed road map or menu of options" to help the country deal with these challenges, though the finance ministry is well-prepared to tackle any such situation.
"I also implore you to look beyond current concerns about inflation. Some of these structural reforms ...such as Goods and Services Tax, Insolvency and Bankruptcy Code (IBC) etc might have been temporarily overshadowed by external events such as the pandemic and now the geopolitical conflict. However, once these clouds recede they will begin to manifest and enhance India's growth," Nageswaran said.
His comments came soon after the Reserve Bank hiked key interest rate by 50 basis points to tame inflation. The central bank upped inflation projection to 6.7 per cent, while maintaining growth estimate at 7.2 per cent for current fiscal year.
Nageswaran said IMF has forecast the Indian economy to cross USD 5 trillion by 2026-27. India's Gross domestic product (GDP) in dollar terms has already crossed USD 3 trillion. "If the dollar GDP of the country doubles every 7 years, we will be at USD 20 trillion GDP by 2040 with a per capita income of close to USD 15,000," he said.
India's economy grew 8.7 per cent in last fiscal year (2021-22), as against 6.6 per cent contraction in previous year. In its third monetary policy of 2022-23, the Reserve Bank on Wednesday retained its GDP growth forecast at 7.2 per cent for current fiscal year but cautioned against negative spillovers of geopolitical tensions and a slowdown in the global economy.
It said there are indications that the recovery in domestic economic activity remains firm, with growth impulses getting increasingly broad-based.