State Bank of India (SBI) Chairman Dinesh Khara on Friday said that the impact of a global recession is unlikely to be as pronounced in India as compared to other countries. He said that India is doing well with a projected growth rate of 6.8%.
In an interview with PTI on the sidelines of the annual meeting of the International Monetary Fund and the World Bank here, Khara said, “With a projected growth rate of 6.8 percent and inflation much under control, India is doing reasonably well.”
“Majorly, it (India) is an inward-looking economy in terms of demand because a significant component of the GDP is essentially addressed to the domestic economy. So, from that point of view, I think it (global recession) will have an impact but it won’t be as pronounced as perhaps (it will be on) other economies which are fully coupled with the globe,” he told PTI.
“If we look at the beta factor, perhaps the Indian economy’s beta factor would be much lower as compared to some of the other larger economies that have a significant component of export,” he added.
He said that the primary cause of inflation is not demand-led, but it is essentially supply-side inflation.
“If we really look at the supply-side aspect of inflation, we’ve got a situation where capacity utilization is just about 71 percent. To that extent, there’s elbow room available for improving the capacity. So essentially, supply chain disruption, which has happened on account of the global headwinds, and… its impact on crude prices is one of the contributing (factors)…,” he told PTI.
Overall, all economies across the globe are going through a rough patch, Khara said, adding that the government is focused on dealing with these factors. India’s growth prospects are expected to improve going forward, he said.
India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing, the EAC-PM member observed.
However, the World Bank had earlier projected 6.5 per cent growth rate for the Indian economy for 2022-23, a drop of one percentage point from its June 2022 projections, citing deteriorating international environment.
Recently, the Reserve Bank of India also slashed the growth projection to 7 per cent for current fiscal year from the earlier forecast of 7.2 per cent, citing aggressive tightening of monetary policies globally and moderation in demand.
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