Informist, Tuesday, Mar 21, 2023
NEW DELHI – At a time when the global economy is expected to slow down, India is better placed than many other countries and will maintain the pace of growth achieved this financial year ending March, according to a Reserve Bank of India staff paper.
Global growth is expected to slow down this year, and a recession is possible as well due to supersized interest rate increases by major central banks in their bid to bring down inflation.
"The NSO's (National Statistical Office) end-February data release indicates that the Indian economy is intrinsically better positioned than many parts of the world to head into a challenging year ahead, mainly because of its demonstrated resilience and its reliance on domestic drivers," said the paper titled 'State of the Economy,' in the central bank's bulletin for November.
India's GDP is estimated to grow 7% this financial year, according to the second advance estimate by the National Statistical Office.
The paper is attributed to a host of central bank officials, including Deputy Governor Michael Patra, and does not necessarily reflect the views of the RBI.
The Indian economy has emerged from the years of the COVID-19 pandemic stronger than what was initially estimated, and has gathered steady momentum since Jul-Sep, the paper said. However, this pick-up in growth is not reflected in the year-on-year growth rates, as they are marred by statistical base effects.
The paper said that while India's economy is expected to grow to 169.7 trln rupees in 2023-24 (Apr-Mar), this number could go up to 170.9 trln rupees as a result of proposition in the Union Budget for 2023-24.
"...what if at least 50 per cent of the `35,000 crore (350 bln) of tax relief proposed in the Union Budget is used by taxpayers for consumption and adds to private final consumption expenditure – a component of GDP," the paper said.
"This is plausible because the proportion of an additional rupee of income that is spent on consumption by households in India is estimated at 0.54 (54 paise). And what if even a third of the additional allocation of `3.2 lakh crore (3.2 trln) budgeted for effective capital expenditure adds to gross fixed capital formation, another component of GDP?"
This was simple arithmetic, not a "hurray at half-time", the paper said, adding that the authors were optimistic about India, whatever the odds.
The paper said that headline inflation remained high and core inflation continued to defy the distinct softening of input costs. India's headline CPI inflation fell to 6.44% in February from 6.52% in January, but core inflation, which excludes food and fuel, remained stubborn at 6.1%.
Core CPI inflation has remained above 6% for six straight months now. End
Reported by Shubham Rana
Edited by Avishek Dutta
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Informist, Tuesday, Mar 21, 2023
NEW DELHI – At a time when the global economy is expected to slow down, India is better placed than many other countries and will maintain the pace of growth achieved this financial year ending March, according to a Reserve Bank of India staff paper.
Global growth is expected to slow down this year, and a recession is possible as well due to supersized interest rate increases by major central banks in their bid to bring down inflation.
"The NSO's (National Statistical Office) end-February data release indicates that the Indian economy is intrinsically better positioned than many parts of the world to head into a challenging year ahead, mainly because of its demonstrated resilience and its reliance on domestic drivers," said the paper titled 'State of the Economy,' in the central bank's bulletin for November.
India's GDP is estimated to grow 7% this financial year, according to the second advance estimate by the National Statistical Office.
The paper is attributed to a host of central bank officials, including Deputy Governor Michael Patra, and does not necessarily reflect the views of the RBI.
The Indian economy has emerged from the years of the COVID-19 pandemic stronger than what was initially estimated, and has gathered steady momentum since Jul-Sep, the paper said. However, this pick-up in growth is not reflected in the year-on-year growth rates, as they are marred by statistical base effects.
The paper said that while India's economy is expected to grow to 169.7 trln rupees in 2023-24 (Apr-Mar), this number could go up to 170.9 trln rupees as a result of proposition in the Union Budget for 2023-24.
"...what if at least 50 per cent of the `35,000 crore (350 bln) of tax relief proposed in the Union Budget is used by taxpayers for consumption and adds to private final consumption expenditure – a component of GDP," the paper said.
"This is plausible because the proportion of an additional rupee of income that is spent on consumption by households in India is estimated at 0.54 (54 paise). And what if even a third of the additional allocation of `3.2 lakh crore (3.2 trln) budgeted for effective capital expenditure adds to gross fixed capital formation, another component of GDP?"
This was simple arithmetic, not a "hurray at half-time", the paper said, adding that the authors were optimistic about India, whatever the odds.
The paper said that headline inflation remained high and core inflation continued to defy the distinct softening of input costs. India's headline CPI inflation fell to 6.44% in February from 6.52% in January, but core inflation, which excludes food and fuel, remained stubborn at 6.1%.
Core CPI inflation has remained above 6% for six straight months now. End
Reported by Shubham Rana
Edited by Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
