‘Fundamentals solid … enabling policies helped deal with Covid’

India will probably be dealing with challenges this yr of managing a sustainable excessive development, moderating inflation, conserving fiscal deficit below stability and likewise guaranteeing that the exterior worth of the Indian rupee stays the identical however the medium-term fundamentals of the Indian economic system “remain solid”, Chief Economic Advisor V Anantha Nageswaran mentioned Wednesday. Enabling insurance policies and proactive steps taken by the federal government together with company tax cuts and digitisation of the economic system helped the nation cope with the unprecedented state of affairs arising because of the pandemic, Finance Minister Nirmala Sitharaman mentioned.

Speaking on the ‘India’s Economic Journey@75’ occasion, being collectively organised by the Department of Economic Affairs and Sebi as a part of the Azadi Ka Amrit Mahotsav iconic week celebration, she mentioned India, with its robust fundamentals, has periodically confronted challenges and emerged from it. “Even after pulling the economy out, removing all the under-growth (post-2014), you still had challenges and in a way the three major steps which were taken — reducing the corporate tax, formalisation/digitisation of the economy, IBC code, GST — the heavy-lifting that happened prepared us for a situation which nobody could imagine,” Sitharaman mentioned.

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She mentioned during the last 2 years, regardless of COVID, Indian retail traders have discovered on-line means to entry the inventory market and Sebi has a task to play in investor schooling. Sitharaman mentioned that the federal government seems to be on the focused strategy of offering help and takes the enter from the bottom shortly.

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“We need to understand that the medium-term fundamentals of the Indian economy remain solid and the Indian economy is much better placed than many others in this world to face the challenges that we are currently encountering,” Nageswaran mentioned.

He mentioned there might be no “pre-programmed road map or menu of options” to assist the nation cope with these challenges, although the finance ministry is well-prepared to deal with any such state of affairs.

“I also implore you to look beyond current concerns about inflation…Some of these structural reforms … such as Goods and Services Tax, Insolvency and Bankruptcy Code (IBC) etc might have been temporarily overshadowed by external events such as the pandemic and now the geopolitical conflict. However, once these clouds recede they will begin to manifest and enhance India’s growth,” Nageswaran mentioned.

Nageswaran mentioned the IMF has forecast the Indian economic system to cross $5 trillion by 2026-27. India’s Gross home product (GDP) in greenback phrases has already crossed $3 trillion. “If the dollar GDP of the country doubles every 7 years, we will be at $20 trillion GDP by 2040 with a per capita income of close to $15,000,” he mentioned.

India’s economic system grew 8.7 per cent within the final fiscal yr (2021-22), as towards 6.6 per cent contraction within the earlier yr. In its third financial coverage of 2022-23, the Reserve Bank on Wednesday retained its GDP development forecast at 7.2 per cent for present fiscal yr however cautioned towards unfavorable spillovers of geopolitical tensions and a slowdown within the international economic system. It mentioned there are indications that the restoration in home financial exercise stays agency, with development impulses getting more and more broad-based.