Sustained growth of 7%
feasible for India: RBI MPC member Shashanka Bhide
Sustaining the economic
growth momentum of 7 per cent in 2024-25 and beyond is feasible on the back of
favorable monsoon, higher farm productivity and improved global trade, RBI
Monetary Policy Committee (MPC) member Shashanka Bhide said on Monday.
During 2023-24, the economy
is likely to record a growth rate of near 8 per cent on account of good
performance of manufacturing and infrastructure sectors.
"(India's economic)
Growth in the current year is likely to be supported by agriculture with a
favourable monsoon and improved global trade. Sustaining the growth momentum of
7 per cent seems feasible," he told PTI.
Bhide further said that in
the long-term, the need for productivity improvements will remain the key
factor to achieve food price stability.
Asked what are some of the
headwinds he is wary of, Bhide said one area of concern is the global
environment.
"The slow pace of
recovery in global demand on one hand and supply chain disruptions on the other
hand... if the ongoing geopolitical conflicts are not resolved quickly, (it
will) pose significant challenge in terms of demand as well as input prices.
"We should also be
prepared for minimising the adverse impact of extreme weather events on
output," he said.
Recently, the International
Monetary Fund (IMF) raised India's growth projection to 6.8 per cent for 2024
from its January forecast of 6.5 per cent citing bullish domestic demand
conditions and a rising working-age population.
The Asian Development Bank
(ADB) also raised India's GDP growth forecast for the current fiscal to 7 per
cent from 6.7 per cent earlier, saying the robust growth will be driven by
public and private sector investment demand and gradual improvement in consumer
demand.
Asked what is the long-term
solution for high food prices, Bhide noted that one aspect of high food
inflation in the recent years has been the impact of weather conditions on the
perishable commodities such as vegetables.
According to him, although
such price spikes may be short-term, their impact is significant.
As many have pointed out,
Bhide said processing and preservation of commodities that help in their
storage would be a part of the solution in the longer term, just as the
supply-side measures that help raise crop resistance to adverse weather.
While noting that the
investments in market infrastructure, modernisation of markets for agricultural
commodities to help improve supply response to changing demand conditions would
also reduce the excessive price spikes, he said. "In the long-term, the
need for productivity improvements will remain the key factor to achieve food
price stability."
The eminent economist
observed that inflation has remained above the policy target for several
countries.
"There are also
differences in the growth conditions, with some countries experiencing
significant slowdown while some experiencing reasonable positive
momentum," he said, adding that the priority towards bringing down
inflation rate to the target appears to be keeping the monetary policies
restrictive.
RBI Governor Shaktikanta Das
has recently said the baseline projections show inflation moderating to 4.5 per
cent in 2024-25 from 5.4 per cent in 2023-24 and 6.7 per cent in 2022-23.
Responding to a question on
slowing down of foreign direct investment in India, Bhide said the FDI inflows
have been strong in the past few years in response to the various policy
reforms along with the attraction of a fast growing economy.
"One reason for the
slowdown now may also be the slow pace of global demand recovery," he
observed.
While India's economy has
grown rapidly, Bhide explained a weak global demand may not broaden the scope
or scale of opportunities for Foreign Direct Investment (FDI).
Asked whether India has been
able to leverage China-plus one strategy, Bhide said India's strategies to
support investments in new opportunities in terms of technology and energy have
attracted attention.
Domestic demand plus global
demand appear to have gained attention, he added.
Various other countries like
the US, Canada, Mexico, Brazil, Poland and Germany have witnessed significant
gains in the global market share, following the decline of FDI flows to China.
www.business-standard.com.
dt. 23.04.2024