No obvious alternative to dollar in trade and investment at this point: CEA

De-dollarisation is a multi-decade process

There is no alternative to dollar currency as it dominates global trade, financial markets and investments while rupee trade is only happening on the margins, the chief economic advisor V Anantha Nageswaran said.
“Dollar still dominates trade, financial markets and investments globally. No obvious alternative to dollar at this point. De-dollarisation is a multi-decade process,” Nageswaran said.

The chief economic advisor was speaking at an industry session of Federation of Indian Chambers of Commerce and Industry (FICCI) on
He said that the rupee trade can happen with some neighbouring countries and other trading partners, but it is only at the margins and will not transform the world of invoicing overnight.

India had initiated rupee trade with Russia but there have been reports of the two countries suspending it as there is a high trade gap in favour of Russia. Moscow apparently believes it will end up with an annual rupee surplus of over $40 billion if the mechanism is worked out and feels rupee accumulation is 'not desirable'.

The Commerce Minister Piyush Goyal had said that India is also soon likely to open trade in rupee-dirham with UAE and the central banks of the two countries and the finance ministry are currently discussing it.
The rupee trade has not taken off very actively and the commerce ministry has been saying that the exporters are free to trade in the currency convenient to them.

India’s total export of goods have stabilised at $450bn due to global slowdown. Services exports on the other hand at $350 bn is growing at 25-30% annually.

“The global economy is not entering recession. FY24 will be slower for the IT sector but other sectors like construction will compensate for it,” he said.
Nageswaran said that despite rupee weakening, India’s per capita income has grown from $500 in 1993 to $2500 currently. The nominal GDP by the end of FY24 is likely at $3.75tn. If India becomes a $7tn economy by the end of the decade, with population stabilising at 1.4 billion, the per capita income will be $5000, he said.

Talking about the sustainability of the government debt, the chief economic advisor said that the combined government debt (Union and states) in 2005 was 81% of GDP. By the end of FY22, the combined government debt stood at 84% of GDP which is an increase of only a few percentage points.
“Government debt is sustainable and has not grown disproportionately. Nominal GDP is at 11-12% and cost of borrowing is at 7%. India’s debt is high but has not grown exponentially and is stable,” he said.