Given global uncertainties, growth will be in the range of 7-8.5%: Chief Economic Advisor

Chief Economic Adviser V. Ananth Nageswaran said on Wednesday that India’s growth rate is expected to be in the range of 7-8.5% given the global uncertainties.

The International Monetary Fund recently slashed its growth forecast to 8.2% which is higher than the 7.2% by the Reserve Bank of India.

“The range of consequences is very wide. It is wider than ever and it makes decision making even more dangerous. It takes a lot of luck to fix it,” he said at an event here.

According to the Economic Survey, India’s economy is expected to grow by 8-8.5% in the fiscal year beginning April 1.

The CEA said they held talks with Fitch Ratings this afternoon, which forecast a growth rate of 8.5% for India.

He said though he has a negative outlook on India with a BBB minus rating, he has a forecast of 8.5 per cent real GDP growth for 2022-23.

“So, the reality could actually be between this range of 7-8.5%. We will take it under the current circumstances because the uncertainty is how long this current conflict in Europe will last and will have an impact not only on the price of hydrocarbon fuels, But even on fertilizer prices, food prices etc., it is quite difficult to estimate at this point,” he said.

He said that even in developed countries, there is a possibility of spillover effect due to tightening of monetary policy by central banks.

The RBI on Wednesday raised the benchmark lending rate by 40 basis points (bps) to 4.40% after an unscheduled MPC meeting, to control inflation, which has remained above the target of 6% for the past three months.

The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, required banks to retain deposits by 50 bps to 4.5% to infuse ₹87,000 crore liquidity from the banking system.

This is the first rate hike since August 2018 and the first instance of an unscheduled hike in the repo rate by the MPC.