Little more optimistic about India's economic growth than few months ago, says RBI MPC member Jayanth R. Varma
The Hindu
According to the Reserve Bank of India’s projections, India’s GDP is likely to grow at 6.5% in the current fiscal year
RBI MPC member Jayanth R. Varma on October 24 said that he is 'little more' optimistic about India's economic growth than a few months ago, though concerns remain as the country is now 'disproportionately' dependent on household spending with other components of demand encountering headwinds.
Mr. Varma further said that India should be willing to accept inflation between 4% and 5% for several quarters as the price of avoiding a growth shock.
"I am a little more optimistic about growth than I was 2-4 months ago. My cautious optimism stems from improved consumer confidence and various indicators that point to the continuation of the growth momentum," he told PTI in a telephonic interview.
While keeping the global growth projection for FY24 unchanged at 3%, the International Monetary Fund (IMF) recently revised its growth projection for India upwards by 20 basis points to 6.3% in October.
"However, the outlook remains fragile because demand is now disproportionately dependent on household spending with other components of demand encountering headwinds," the eminent economist emphasised.
Explaining further, the Monetary Policy Committee (MPC) member said while external demand is weak due to the sluggishness in the world economy, the revival in private capital expenditure is still too tentative and muted.
"Fiscal consolidation amounts to a withdrawal of the pandemic era government spending stimulus," Varma, currently a professor at the Indian Institute of Management, Ahmedabad noted.