The Indian economy can now grow rapidly for an extended period of time without heating up and encountering problems like it has done in the past, Chief Economic Adviser V Anantha Nageswaran has said.
"In the last 30 years, whenever the Indian economy grew very strongly for 3-4 years, it used to run into problems: inflation will pick up, imports will go up, the currency will become very expensive, and then we have to take some drastic action," Nageswaran said on June 9.
"But this time, because of the sound economic policies we have followed, because of the infrastructure we have built in the last eight years, and because of digital transformation of the economy, it is possible now for the Indian economy to grow for a longer period – not just three years or five years, but seven or 10 or 15 years like China did between 1979 and 2008," he added.
Nageswaran was speaking at an industry interaction in Lucknow, organised by Confederation of Indian Industry.
The government has been in a bullish mood after official data showed on May 31 that the Indian economy grew by 6.1 percent in January-March – well above expectations of 5.1 percent. As a result, the full-year GDP growth for 2022-23 is now estimated at 7.2 percent, 20 basis points higher than the statistics ministry's previous estimate of 7 percent.
One basis point is one-hundredth of a percentage point.
In his remarks in Lucknow on June 9, Nageswaran reiterated his confidence that the growth rate for 2022-23 may be revised higher in the future.
"That is the momentum in the economy. That is what we are witnessing, that even 7.2 percent will turn out to be an underestimate and not an overestimate of growth last year," Nageswaran said.
"As a typical middle-class person who grew up in a small town in Madurai, my tendency is always to be cautious and not talk too much about how well we are doing because we always believe we should not tempt gods, we should not anger them, and we should be grateful for what they have given. But once in a while, it's important for the public also to know…we are not only doing well but also doing well even by our own historical standards," he remarked.
Speaking about 2023-24, in which he expects the GDP to grow by 6.5 percent, the government's top economist said the first two months of the year show "good growth momentum".
Nageswaran also tried to downplay the risks to agricultural production and food inflation from the delayed monsoon, saying reservoir levels at present were 24 percent higher than their 10-year average.
"Seed availability is pretty good in terms of quantity… Foodgrain procurement was very strong in 2022-23, so there is enough inventory to control price fluctuations," he added.
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