In an interview with Business Standard’s Arup Roychoudhury, chief economist at CRISIL, DK Joshi, reiterated his company’s stand that India’s real GDP will grow at 7.8% in FY23. Let us listen in
Q1: I would start by asking about your GDP projection for FY23. Your projection is 7.8%, which is slightly lower than what the government projected through the Economic Survey which is 8.5%, and at par with what the RBI projected which is 7.8%.
So, what is the rationale behind this growth projection of yours? Ans: >India’s growth projection of 7.8% was retained because Omicron wave proved to be mild, despite the geopolitical tensions >Positivity has returned to the contact-based services >Russia-Ukraine crisis has led to significant uncertainties >Crude oil price will be in the range of $85-90 a barrel in FY23 Q2: Now, the RBI’s projection for CPI inflation, for the next fiscal is 4.5%. But that again was before the recent geopolitical flare-up. Do you think that projection holds anymore? And what is your projection, given the current situation. Ans: >RBI’s forecast of 4.5% inflation was made before the Russia-Ukraine crisis >RBI should recalculate inflation forecast based on the changes in crude oil, commodities and geopolitical situations >Raised inflation outlook to 5.4% for fiscal 2022-23 >In a comfortable position with food grains >Rising prices of imported edible oil will put pressure on inflation >Burden of global crude oil price rise will be shared between households, the government and oil marketing companies Q3: To what extent do you think current commodity prices in this situation will impact government’s Budget targets? Ans: >With inflation going up, nominal GDP is going to be higher than what it was assumed earlier >Nominal GDP doing well is good for tax collection >It will be a challenge to shrink the subsidy bill by the proposed 26% >Govt has two options: Cut the capex or raise the fiscal deficit from its current level >Govt may not raise the fiscal deficit, so the expenditure will get reshuffled again Q4: If you could also touch upon the rupee situation – how will that impact our trade, import export. Ans: >Don’t expect too much depreciation of rupee >Rupee’s going to be around 76.5 for 1 USD, by March 2022-end >Forecasting a mild depreciation next year, with Rupee around 77.5 for 1 USD >Rupee’s going to be volatile between 76.5 and 77.5 Q5: Do you think capex could be hit and the government would have to spend more on subsidies and other welfare measures? Ans: >If pressure continues, capex is bound to be hit >Budget’s cushion, based on conservative estimates, is gone now
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First Published: Fri, March 11 2022. 08:30 IST