FY23 GDP growth to be higher than consensus estimate of 7.5-8%: Neelkanth Mishra

Neelkanth Mishra

India's economy will grow at a better-than-expected pace in FY23, helped by overall improvement in economic activities and buoyant tax collections, said Neelkanth Mishra, Co-head of Asia Pacific Strategy and India Strategist at Credit Suisse and a part-time member of the Prime Minister's Economic Advisory Council.

"For FY23 though the consensus predicts GDP of 7.5-8 percent, in my view we are doing far better & GDP level in FY23 will be at least 5 percent points higher than the consensus," Mishra said at an industry dialogue session at the CII Global Economic Policy Summit 2021 on November 17.

Mishra observed that mobility has improved with smartphone penetration picking up and grocery mobility is up by 40 percent.

"Most companies are also showing and talking of two years CAGR on volume growth of 8-10 percent. GST collections, 2-year CAGR are all reporting very strong numbers," he added.

However, certain parts of the economy are still struggling and they need to be looked at and a lot of job losses which are yet to recover are in the services sector, Mishra said.

"Two-wheeler sales growth is still weak. NREGA demand is still high.  Clearly there are segments of the economy that are still struggling," he said.

Even if these jobs come back, their household balance sheets are broken and they will take time to mend. Repairing this at the earliest should be the priority of the fiscal policy, added Mishra.

Also speaking at the Summit, Sajjid Z Chinoy, Chief India Economist, J P Morgan and another part-time member at EAC-PM said, "The challenge for monetary policy on one hand is to nurture the recovery & at the same time preserve & protect macro economic stability at a time when global cycle is turning."

Commenting on  fiscal consolidation, Chinoy observed that there is a need  to stabilize and eventually reduce the primary deficit. However, he cautioned that the process should not be too quick as a rapid tightening of fiscal policy has in the past choked the recovery of advanced economies.

Chinoy also noted that over the next few years government spending on physical infrastructure, health and education is going to be necessary to boost aggregate demand.