Chief Economic Advisor V Ananth Nageswaran on Monday said that the Indian economy will be USD 3 trillion by the end of the current financial year 2022-23 and is expected to be USD 7 trillion in the next seven years.
His estimate exceeded the Centre’s expectation of becoming a $5 trillion economy by 2025.
Speaking at a session organized by the MCCI, Nageswaran virtually said that the calendar year 2023 began in the context of the ongoing conflict between Russia and Ukraine, which would “create geopolitical and geo-economic uncertainties”.
Another key aspect is China’s opening up two years after the pandemic and its impact on the world economy, especially the fall in oil and commodity prices, and also on the development of the advanced economies of the US and Europe.
“In these contexts, the Indian economy will be of a size of USD 3 trillion at the end of March 2023 and USD 7 trillion in the next seven years, which is not impossible,” Nageswaran said.
The CEA also said that the most important issue is that the US is expected to reduce its interest rates in 2024 or 2025, which will have an impact on the Indian rupee.
The economist said the Office for National Statistics has predicted that the country’s economic growth in 2022-23 will be seven per cent in real and 15.4 per cent in nominal terms.
Nageswaran also noted that the realistic medium-term growth is 6.5 per cent, as opposed to the eight or nine per cent that was seen during the 2003-2008 period.
“During the period 2003-2008, there was a global boom in terms of capital flows to India. The Chinese economy and commodity economies grew strongly. Now, the situation is different because of the global monetary tightening, which will have an impact on the entire economy, “They said.
The CEA also noted that India has undertaken several structural reforms since 2016, including the introduction of the Goods and Services Tax, and the implementation of the Insolvency and Bankruptcy Code.
He said that Jan Dhan accounts have facilitated seamless transfer of government benefits.
The economist also said that improving digital infrastructure “has the potential to contribute 0.2 to 0.5 per cent to the country’s GDP”.
The corporate sector is now debt free and ready to borrow, and private capital formation is taking place at this time, while banks have low NPAs and are also willing to lend.
(with PTI inputs)
ALSO READ: Banks raise record Rs 91,500 cr in debt capital so far in FY23: Report