The government has mandated the central bank to ensure retail inflation based on the consumer price index (CPI) remains at 4 percent with a 2 percent margin on either side. (Representative image)
Indian Economy: Virmani said he sees no impact of the US and European banking crisis on India’s financial sector.
India’s economy will grow by around 6.5% in the current financial year, despite high oil prices and rising geopolitical tensions, said NITI Aayog member Arvind Virmani.
Virmani further said that he does not see any impact of the US and European banking crisis on the Indian financial sector.
“So in the current financial year, due to all the changes over the past year, I have reduced my economic growth forecast for India by 0.5%.
“So it’s 6.5%, even more minus 0.5%,” he told PTI.
Recently, the World Bank and the Asian Development Bank forecast India’s economic growth to moderate to between 6.3% and 6.4% due to a slowdown in consumption and tough external conditions.
The International Monetary Fund (IMF) also lowered India’s economic growth projection for the current fiscal year to 5.9% from 6.1% earlier. Yet India will continue to be the fastest growing economy in the world.
Responding to a question about the Reserve Bank of India’s flexible inflation targeting, Virmani said: “We should be more like the US Federal Reserve, which has an inflation target but also takes into account GDP,” said he declared.
The government has mandated the central bank to ensure retail inflation based on the consumer price index (CPI) remains at 4 percent with a 2 percent margin on either side.
The central bank, which has made six consecutive hikes in the short-term (repo) key rate since May 2022 to control high inflation, decided to take a break at the start of the month. The cumulative increase in rates since May 2022 is 250 basis points.
Asked if India could replicate the economic success that has placed China at the center of the world economy and global power, Virmani said he did not believe any other country would now be allowed to follow unfair trade policies that China had followed.
“And my estimate is that about 1/3 of China’s growth wouldn’t have happened if it hadn’t had these unfair trade policies,” he said.
Virmani pointed out that India does not follow an asymmetric policy and can grow by 6.5-7% without following unfair trade policies.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
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