04 Jul , 2022 By : Monika Singh
While the Covid pandemic, followed by the geopolitical situation, hit economies worldwide, the Indian government’s administrative and other measures are bringing back demand, said V Anantha Nageswaran, Chief Economic Advisor to the Government of India. “Steady rise in average level of GST collection are indicators of demand coming back,” Nageswaran said in an interview with Shaleen Agrawal, at the Financial Express Modern BFSI Summit.
However, one must be mindful of the uncertainties too, he added. “Even as there is momentum and the PMI manufacturing and services index also are at a high, we will have to accept the fact that uncertainties will be with us for some time. We need to also adapt our behaviour in terms of consumption, etc,” Nageswaran said.
Earlier last month, Nageswaran had maintained that the Indian market is moving forward rapidly and the country’s economy will grow to $5 trillion in the next four years. He had stressed that key indicators of the economy have crossed their pre-pandemic levels. The latest GDP data showed real growth in FY22 exceeded the pre-pandemic (FY20) level by 1.5 per cent, private consumption by 1.4 per cent and fixed investment by 3.8 per cent. On a year-on-year basis, the economy grew 8.7 per cent in FY22 from -6.6 per cent in the previous year.
Challenges for economy, and way forward
“There are challenges looming which include maintaining an acceptable level of growth rate with tolerable inflation, ensuring that fiscal deficit stays within the target that the government has set, that current account deficit can be financed and the external value of rupee evolves in an orderly and gradual manner,” Nageswaran said.
Some of the tools being used by the government to address these challenges, as Nageswaran said, are monetary policy, ability to use duties either to raise them, or lower them depending on commodity in question and to intervene administratively in areas that need intervention and to extend targeted subsidies when required, etc. “These measures are surely working. In May, some of the inflation rates in some commodities have indeed come down and that is a very important sign that shows that administrative actions are indeed having an impact,” he said. While the CEA remained optimistic, he also said that ‘inflation is being caused by many factors that are beyond the control of the government’ and so people will have to practice caution and be prepared in terms of the intensity and speed of the impact of the geopolitical uncertainties.