Risks to 6.5% growth goal more evenly balanced now: CEA

Nageswaran cites sustained growth momentum across sectors along with rising private investments and public capex spending as offering buffers against external risks

Chief Economic Advisor (CEA) V. Anantha Nageswaran expressed confidence that the risks to India’s projected GDP growth trajectory of 6.5% in 2023-24 were more evenly balanced now compared with a few months ago, as sustained growth momentum across sectors along with rising private investments and public capex spending would prove to be buffers against external risks.

“We are very pleased to have a story of both sustained economic momentum, combined with macro-economic and fiscal stability, and we look forward to another year of solid economic performance by India,” Mr. Nageswaran said in a briefing after the National Statistical Office released its first national income estimates for 2022-23.  

While the CEA conceded that the “better than expected [7.2% GDP growth] numbers for 2022-23” would weigh on this year’s growth, he stressed the importance of taking the momentum into consideration.  

“We have seen enough information about the momentum in the purchasing managers’ indices [S&P Global PMI], credit growth, private sector capital formation and the revenue collections of the government, therefore auguring well for its ability to maintain capital investment plans and so on,” he said.   

 “Anyway, we had projected a lower growth of 6.5% from the 7% estimated for 2022-23… We are prepared to stick our neck out one more time and say that the risks to a 6.5% growth projection for this year are more evenly balanced now, than at the time when we had felt that downside risks dominate,” Mr. Nageswaran said.  

“So, in that sense, if anything, we upgrade our assessment of the growth outlook and the confidence that we attach to this number rather than downgrade it,” he said.  On economists expressing concerns about insipid private consumption spending trends, Mr. Nageswaran said there were signs of a turnaround in rural demand. 

“With the expected pick-up already happening in residential realty construction and the overall industrial activity, employment of labour, which have migrated to rural India [and] will return to urban India, therefore, income transfers to rural India should also happen. So, we are confident that private final consumption expenditure in 2023-24 will be respectable,” he asserted.