India to remain fastest growing global economy despite Russia-Ukraine war

India will remain the fastest growing economy in the world, notwithstanding the economic uncertainties triggered by the Russia-Ukraine war that is also impacting global supply chains, said a top government official.

Rajiv Kumar, vice-chairman of the National Institution for Transforming India (Niti Aayog), the apex public policy think tank of the Government of India, said the third largest Asian economy is on the cusp of a major economic recovery and talks of possible stagflation are "overhyped" as a strong economic foundation is being laid with the reforms carried out by the government over the last seven years.

"Given all the reforms that we have done in the last seven years, and given that we are seeing the end of the Covid-19 pandemic hopefully, and the 7.8 per cent rate of growth that we will get this year (2022-23), a very strong foundation is now being laid for further rapid increase in economic growth in the coming years," Kumar was quoted as saying by Press Trust of India.

India is projected to grow 8.9 per cent 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 per cent.

On Sunday, Ficci (Federation of Indian Chambers of Commerce and Industry), India’s apex industry body, projected the economy to grow 7.4 per cent in the current financial year 2022-23 with a minimum and maximum growth estimate of six per cent and 7.8 per cent, respectively.

The Ficci Economic Outlook Survey forecasts the growth for agriculture and allied activities at 3.3 per cent, while for industry and services sectors at 5.9 per cent and 8.5 per cent, respectively, during the fiscal year that started on April 1.

The current Russia-Ukraine conflict is expected to further aggravate the price rise through imported commodities. The estimate for average Wholesale Price Index-based inflation in the March 2022 quarter has been put at 12.6 per cent, the industry body said.

Kumar acknowledged that because of the Russia-Ukraine war, India's GDP growth projection could be revised.

"But even then, India will remain the fastest growing economy and all the other economic parameters are actually quite within the range," he said.

On rising inflation, the Niti Aayog official said that RBI is keeping a close watch as per its mandate.

"I am sure that the RBI is well in control of it (inflation) and will take the necessary steps if and when required," he said.

Retail inflation hit an eight-month high of 6.07 per cent in February, remaining above the RBI's comfort level for the second month in a row while wholesale price-based inflation soared to 13.11 per cent on account of hardening of crude oil and non-food item prices.

– issacjohn@khaleejtimes.com