By Anup Roy
India may grow closer to 7 per cent in the financial year through March, stronger than the central bank’s 6.7 per cent forecast, Deputy Governor Poonam Gupta said on Thursday, a pace that would keep it among the world’s fastest-growing major economies.
Her upbeat estimate is based on expectation of a robust April-June quarter, Gupta said at an event at the Madras School of Economics in Chennai, the Financial Express newspaper reported. Official figures for the period are due later this month, with economist predictions generally ranging between 6.9 per cent to 8 per cent. “It means that a year-around growth rate can be much higher, close to 7 per cent,” she said.
The brisk pace points to the economy’s resilience despite shocks, such as a deficient monsoon and elevated energy costs, and also goes to show why Gupta has recently turned relatively hawkish. Minutes of the RBI’s August policy meeting released this week showed Gupta had raised the possibility of a rate hike later this year.
Gupta also sounded confident about India’s external accounts, saying it will be “much more conducive.” Economists expect the nation’s balance of payments to turn positive this financial year after previous forecasts of a deficit. That’s largely driven by expectations of foreign inflows of as much as $80 billion following measures to support a depreciating currency, including a special incentive to attract foreign currency deposits.
Gupta’s comments come as Indian officials have turned more upbeat on prospects about the nation’s economy as the worst of their fears in the wake of the Iran war didn’t materialize. The robust growth prompted Prime Minister Narendra Modi last week to reiterate his ambition to make India a developed nation by 2047. Such a feat may require a sustained 8 per cent plus growth rate for at least two decades, economists say.
