5% is not a fanciful number: CEA

NEW DELHI: Commodity prices would play a key role in determining whether India meets its growth and inflation targets, chief economic advisor V. Anantha Nageswaran said in an interview, adding that India could well beat the projections made by global rating agencies if commodity prices fall.

Global policymakers are unlikely to end monetary tightening quickly as was expected by financial markets, as inflation could be stickier, he said, adding that this would also impact India.

He said capex investments from the government and the private sector would have to continue in tandem for India since its investment needs for the next 30 years were substantial. Edited excerpts:

 Are global concerns of growth slowdown and, a looming recession, inflation real for India as we go into the next fiscal? Do you expect the monetary policy tightening cycle to continue?

For India, I don’t comment because I leave it to the Reserve Bank of India RBI) to make these decisions. As far as global monetary tightening is concerned, inflation will prove to be stickier than what the financial markets expect. Financial markets are somehow expecting, at the moment, if you look at the market pricing, a fairly quick and swift end to the monetary tightening and even a resumption of the easier policy cycle. I really don’t think that is what policymakers have in mind, and we will get a glimpse of what they are thinking probably this week when the Federal Reserve has its monetary policy meeting. As far as the risk factors to India are concerned, both with respect to growth and inflation, they do come predominantly from global factors, and I would say commodity prices are going to be the key factor in helping us or hindering us from achieving our growth and inflation targets for 2023-24.