Ideas of India Summit 2023: The global economic slump has been worrying India for a long time now and it may have an impact on the country but still it will be the fastest growing economy, said Chief Economist at CRISIL, Dharmakirti Joshi. Speaking at the second edition of ABP Network Ideas of India on ‘Crisis in the Global Economy: India’s Survival Guide’, Joshi said that the growth percentage in India “is going to come down from 7 per cent to 6 per cent” but still the country would be the “fastest growing economy even at 6 per cent.”
Joshi listed three reasons for the slowdown with the first being the spillover of the global economic slump via export and the second being increase in the rate of interest by the Reserve Bank of India. The third reason listed by Joshi for an economic slowdown in India was “very messy geopolitics”
“India to be fastest growing economy even at 6 per cent,” Joshi noted.
Having talked about the slowdown, Joshi also told the areas where the country would be resilient to face those challenges.
“India’s corporate sector is in good health and has a healthy balance sheet. The non-performing assets are very low and infrastructure is being built at an unprecedented rate,” he said.
Digital infrastructure is providing a platform for innovation, leading to an efficient payment system which has allowed the government to reach the needy without leakages, he added.
Meanwhile, Surjit Singh Bhalla, Former Executive Director, of IMF for India, Bangladesh, Bhutan, and Sri Lanka said that monetary policy had little to do with supply shocks and inflation. He said that the interest rates were low because inflation is low.
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“We are at a very fortunate place, we will benefit more from changed globalisation. Interest rates and inflation will come down and no thanks to RBI or US Federal Bank,” Bhalla said.
He added that the RBI should not increase the interest rates when asked by Shankkar Aiyar who was moderating the panel. Joshi was of the view that the central bank “has increased rates enough and now it should be paused. “
Speaking about the challenges, Joshi mentioned climate change saying that food is a major part of the inflation basket. He also said that since the base year is being taken as 2011-12, it has become “very old” and that the consumption pattern has changed now so the inflation numbers are not accurate.
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“India is moving towards a growth path focused on infrastructure and manufacturing which are carbon intensive. Less carbon footprint is a challenge as higher carbon footprints mean higher tariffs.”
He also pointed out the lack of skilled labour in the country.
“Capital investment is happening and efficiency will come but labour is not equipped. 50 per cent of India’s labour force is below secondary school so labour will become a constraint,” Joshi said.