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India on course for major economic recovery, stagflation talks ‘overhyped’: Niti Aayog VP


Niti Aayog VP Rajiv Kumar says India is heading for a major economic recovery

New Delhi:

India is on the cusp of a major economic recovery and talk of possible stagflation is ‘overhyped’ as a solid economic foundation is being laid with government-led reforms over the past seven years, Niti Aayog’s deputy chairman, Rajiv Kumar, said on Sunday. .

Despite the economic uncertainties triggered by the Russian-Ukrainian war which is also impacting global supply chains, Mr Kumar said it was clear from all the stories that India would remain the fastest growing economy. fastest in the world.

“Given all the reforms we have carried out over the past seven years, and given that we are seeing hopefully the end of the COVID-19 pandemic, and the growth rate of 7.8% what we will achieve this year (2022-23), a very solid foundation is now laid for a further rapid increase in economic growth in the years to come,” Kumar said in an interview.

Asia’s third-largest economy is expected to grow by 8.9% in 2021-22, according to recent government data. The Reserve Bank of India (RBI) has pegged the economic growth rate for 2022-23 at 7.8%.

“So I think India is on the cusp of major economic recovery and economic growth,” Mr Kumar said while acknowledging that due to the Russian-Ukrainian war, forecasts for India’s GDP growth could be revised.

“But even then, India will still be the fastest growing economy and all other economic metrics are actually quite within range,” he said.

Regarding concerns over the possible risk of stagflation, Mr. Kumar said that the Indian economy is expected to grow by 7.8% in the current financial year and this is far from the definition of stagflation.

“I think that’s been overstated, because when you talk about stagflation, we’re talking about growth rates that are way below your growth rate or potential output, which is not true at all right now,” he said. he pointed out.

Stagflation is defined as a situation where inflation as well as unemployment is high and demand also remains stagnant in the economy.

On rising inflation, Vice Chairman Niti Aayog said RBI is watching closely in line with its mandate.

“I am sure the RBI has it (inflation) well under control and will take necessary action if and when needed,” he said.

Retail price inflation hit an eight-month high of 6.07% in February, remaining above the RBI’s comfort level for the second consecutive month while wholesale price-based inflation rose. climbed to 13.11% due to the tightening of crude oil and non-food products. item prices.

RBI closely monitors retail price inflation while deciding its bi-monthly monetary policy.

The RBI’s Monetary Policy Committee (MPC) has been mandated to keep annual inflation at 4% until March 31, 2026, with an upper tolerance of 6% and a lower tolerance of 2%.

Incidentally, the MPC must meet from April 6 to 8 to review key rates. It should announce its decision either to keep the repo and repo rates unchanged or to revise them.

Regarding the high prices of gasoline and diesel, Mr. Kumar said that given the global situation, fuel prices are increasing across the world.

“In the past, the government has taken steps to reduce the tax burden. And I think now is the time for states to come forward if they feel it is necessary,” he said.

In any case, Kumar said, the government is closely monitoring the prices of all commodities, including fuel, and will take necessary action.

Gasoline and diesel prices are increasing and vary from state to state depending on the incidence of local taxation.

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