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The government had previously said India would become a USD 5 trillion economy by 2025.
Speaking at a session organised by MCCI, Nageswaran said virtually that the calendar year 2023 began in the context of the continuing conflict between Russia and Ukraine, which will ”create geo-political and geo-economic uncertainties”.
The other major aspect is the opening up of China after two years of the pandemic and its impact on the world economy, particularly on retreating oil and commodity prices and also on the growth of the advanced economies of the US and Europe.
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The CEA also said the most important issue is that the US is expected to lower its interest rates in 2024 or 2025, which will have an impact on the Indian rupee.
The National Statistical Office has predicted that the economic growth of the country in 2022-23 will be seven per cent in real terms and 15.4 per cent in nominal ones, the economist said. Nageswaran also mentioned that the realistic medium-term growth is 6.5 per cent in contrast to eight or nine per cent, which was witnessed during the 2003-2008 period.
”During the 2003-2008 period, there was a global boom in terms of capital flows into India. The Chinese economy and commodity economies grew strongly. Now, the situation is different due to global monetary tightening, which will have a lag effect on all the economies,” he said.
The CEA also said India had undertaken a lot of structural reforms, including the implementation of the Goods and Services Tax, and Insolvency and Bankruptcy Code, since 2016. Jan Dhan accounts have facilitated the seamless transfer of government benefits, he said.
The economist also said improvements in digital infrastructure “has the potential to contribute 0.2 to 0.5 per cent of the country’s GDP”.
The corporate sector is now deleveraged and willing to borrow, and private capital formation is taking place at the moment, while banks are having low NPAs and are also keen to lend.