Adieu 2022.Can We Do Better In 2023?

India, With Its Large population, has managed to steer its economic journey carefully over the past three years of the Covid turmoil.

- Srinath Sridharan

Added to this were global events like the prolonged Covid wave, supply chain disruptions, the Russia-Ukraine war, currency fluctuations, inflation. The Indian economic growth rate has been much better than that of almost all other global economies. But the difficulty is to assess realistically, and without political bias, if the growth rate in the next calendar or financial year will be sustained and move higher than the current rate.

The reason for this hypothesis is that the current financial year has been helped by the base-growth rate of the post-Covid spending and consumption patterns. The coming year would need focus in balancing growth. It should not just be limited to aggregate growth, but be across all segments of the population.

While some analyst calls or research papers may be exuberant in their forecast of the Indian economy in the year ahead, it is better to be pragmatic. The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) estimates growth to be at 6.8 per cent. It has factored in its concerns on global issues and inflationary worries, the higher interest rate regime globally, impact on India's exports and services sector, and importantly, the potential slowdown of capital flows into India.

Even at these lowered growth estimates, India will shine well amongst the global economies and will be the fastest growing global economy. India's share in the global economy is 3.5 per cent, whereas the United States and China make up 44 per cent of the global economy. To balance the arithmetic, Indian growth has to be much higher, and for a longer while, to improve the quality of living of the citizenry.