India better placed to face global challenges among world economies

Factors shore up Indian economy

• Relief from banking, NBFC system stress

• Indian corporates having good financial health

• Ample foreign reserves with RBI

• Raising capex by 35.4% for FY23 to push the public investment

New Delhi: Chief Economic Adviser V Anantha Nageswaran on Wednesday said amid global uncertainties caused by the ongoing Russia-Ukraine war, India is still better placed among the large economies because of an improved financial system and a robust corporate health.

India, he said, has already taken a host of reforms in banking and other sectors and is now focussing on stepping up public investment. "Compared to other nations, even among advanced countries, I think India is relatively better placed for the simple reason that India paid a certain price last decade... we had a banking system stress which was then compounded by stress in the non-banking financial sector towards 2018," he said at Amazon Sambhav Summit. Besides, he said, Indian corporates are in good financial health as they have trimmed their balance sheet. "So we are entering into this decade and this conflict (Russia-Ukraine) with a much better financial system and a much robust corporate financial health. So that gives us a lot of cushion and the Reserve Bank of India has ample foreign exchange reserves and with its recent monetary policy move, it has also signalled its determination to combat the inflationary pressures," he said. India has entered this period with a fairly reasonable comfortable degree of macroeconomic and policy stability, he said, adding, the government has taken several steps, including raising capital expenditure. Finance Minister Nirmala Sitharaman raised capital expenditure (capex) by 35.4 per cent for 2022-23 to Rs 7.5 lakh crore to push the public investment-led recovery of the pandemic-battered economy.

Thus, he said, India is expected to have growth rate of 7-8 per cent depending on the duration of the ongoing conflict. As per the Economic Survey, India's economy is expected to grow 8-8.5 per cent in 2022-23. RBI in its April policy trimmed the growth estimated to 7.2 per cent from the earlier 7.8 per cent for the current fiscal year. Talking about the fallout of the ongoing war, Nageswaran said prices of commodities especially fuel and some foodgrains, have increased, stoking global inflation. It also led to wheat shortage and as a result many countries are facing rising prices. "While inflation is one aspect of it, food security is another aspect. Thankfully in India we are relatively far more comfortably placed than others. But there are several countries where the availability of food is more important than even the price," he said. Asserting that the Budget numbers are credible both with respect to nominal economic growth, and the revenue growth assumptions, Nageswaran said the numbers have become more credible.