NEW DELHI: The Indian economy, which needs to grow around 7.6% in the March quarter to achieve the full year estimate of 6.5%, will get a boost from a rebound in public capex, a steady increase in non-oil exports as well as large private consumption expenditure by those who went for Maha Kumbh, chief economic adviser V Anantha Nageswaran said on Friday.
“…it’s hard to put a number. Given the total number of people who travelled, running into 50-60 crore, it will have a sizeable impact on consumption expenditure,” Nageswaran told reporters after the GDP numbers were released. An estimated 66 crore pilgrims visited Prayagraj for Maha Kumbh and UP chief minister Yogi Adityanath said, “The Maha Kumbh is going to bring a growth of more than Rs 3 lakh crore in the economy of UP.”
While sounding upbeat on the overall economic prospects, CEA nudged the private sector to step up investments, although he did say that there were signs of a pick-up in capital formation.
“There is room for the private sector to invest. There is uncertainty globally, but that is not the case of India. Urban demand is improving, and, in the Budget, a significant cut in income tax was announced. We are also seeing outbound FDI by Indian companies has picked up by around $7 billion. It is a bit of a paradox that uncertainty elsewhere is not coming in the way of the Indian private sector’s outbound FDI… there is a very good economic case for India,” he said.
Nageswaran was, however, cautious on FDI in the wake of global uncertainty but argued that the higher repatriation from India during April-Dec was due to investors cashing out, taking advantage of the stock market valuations, which were high until a few months ago.
Citing Chris Wood of Jefferies, govt’s top economist also argued that Indian markets remained attractive in the long run. FDI and FII were on the lower side so far this year, but the impact had been offset by good performance on remittances and exports, cushioning the impact on the current account deficit, he said.
In his presentation, Nageswaran said India’s economic momentum is expected to sustain, driven by strong rural demand and a revival in urban consumption, despite the global uncertainty. “The near-term global economic outlook is influenced by trade policies of major economies amid a slowing disinflation. These policies may fuel inflation, lead to tighter financial conditions, and increase market volatility,” it added.
