BUSINESS

‘India will be back on 7.5%-plus growth track this fiscal’

Risk factor:Rise in oil prices due to geopolitical factors like sanctions on Iran is a concern, says Virmani.Vijay Soneji  

India’s economic growth seems to be back on a recovery path and the country will be on a firm 7.5%-plus growth track this fiscal, former Chief Economic Adviser (CEA) Arvind Virmani said on Sunday.

He further said the U.S.-China tariff war provides an opportunity to increase India’s exports to the U.S.

‘Growth recovering’

“Economic growth, which has been subject to many ups and downs over the past seven years, seems to be back on a recovery path.

“Domestically, the main risk to macro stability is politically-driven government consumption spending at the cost of investment and fiscal prudence. If this temptation is resisted, the country will be back on a firm 7.5%-plus growth track this year (fiscal),” Mr. Virmani told PTI in an interview. He noted that the rise in oil prices due to geopolitical factors like sanctions on Iran by the U.S. is, however, a concern.

Replying to a query on the U.S.-China tariff war, the economist said it will have some short term disruptive effects on the global economy. “The U.S.-China tariff war, however, provides an opportunity to increase India’s exports to the U.S. and to attract labour-intensive elements of the global supply chain unsettled by higher ‘China risk’ to India,” Mr. Virmani observed.

He said that every government pushes up what are referred to as populist expenditure in the year leading up to the election. “The test is if they keep it modest and don’t disturb the trend in fiscal responsibility. There is, therefore, always a risk of fiscal slippage,” he said