Perspective: India’s GDP Growth in FY23 | 07 January, 2023
Summary
TLDRThe Indian economy is projected to grow at 7% in the 2022-23 fiscal year, down from 8.7% due to the poor performance of mining and manufacturing sectors. Despite the lower growth, it exceeds the RBI's 6.8% forecast. Experts discuss the impact of global headwinds, the need for structural reforms, and the challenges of boosting business confidence and private investment. They also highlight the importance of addressing rural consumption and the potential for inflation to affect the common man.
Takeaways
- 📉 The Indian economy is estimated to grow at 7% in the 2022-23 fiscal year, a decrease from the previous year's 8.7% growth rate, mainly due to poor performance in the mining and manufacturing sectors.
- 🔍 The manufacturing sector is expected to slow down to 1.6% growth from 9.9% in the previous fiscal year, while the mining sector's growth is estimated to be 2.4%, down from 11.5% in 2021-22.
- 📉 The current projections are lower than the government's earlier forecast of 8 to 8.5% growth but are above the Reserve Bank of India's (RBI) projection of 6.8%.
- 🌐 The RBI had lowered the GDP growth forecast due to continued political tensions and tightening global financial conditions.
- 📊 The first advanced estimates by the National Statistical Office (NSO) are subject to revision, with historical data showing revisions can change the GDP growth rate by almost one percentage point.
- 💡 The nominal growth rate of 15.4% indicates high inflation, reflecting adverse terms of trade and stronger global headwinds affecting the Indian economy.
- 🌐 The impact of global headwinds, such as the situation in Europe, may pose spillover risks to India's macroeconomy, particularly affecting export industries like auto and IT sectors.
- 🚧 Business confidence may be affected by prolonged uncertainty due to global crises, which could impact private investment and economic recovery.
- 🛠️ Structural challenges in the Indian economy, such as private capital expenditure not picking up despite high capacity utilization, indicate a need for new solutions to stimulate growth.
- 🏭 The importance of structural reforms, including the simplification of the Goods and Services Tax (GST), improving ease of doing business, and investing in skills development and infrastructure, is highlighted for sustained economic growth.
- 💼 The central government's fiscal conservatism and the expectation of continued prudent budgeting are seen as positive steps towards managing fiscal deficit and supporting private investment.
Q & A
What is the estimated growth rate of the Indian economy in the 2022-23 fiscal year according to the fast Advance estimates?
-The Indian economy is estimated to grow at 7 percent in the 2022-23 fiscal year, which is down from 8.7 percent a year ago as per the fast Advance estimates of national income released by the national statistical office.
Which sectors are primarily responsible for the deceleration of the Indian economy's growth rate?
-The deceleration in the Indian economy's growth rate is mainly due to the poor performance of the Mining and Manufacturing sectors.
How has the output of the manufacturing sector changed from the previous fiscal year to the current fiscal year?
-The manufacturing sector output is estimated to decelerate to 1.6 percent in the current fiscal from 9.9 percent in the previous fiscal year.
What was the estimated growth rate for the mining sector in the current fiscal year, and how does it compare to the previous year?
-The mining sector growth is estimated at 2.4 percent in the current fiscal year, which is a decrease from 11.5 percent in the previous fiscal year.
How does the current projection of 7 percent growth compare to the government's earlier forecast?
-The current projections are lower than the government's earlier forecast of 8 to 8.5 percent growth.
What was the Reserve Bank of India's (RBI) projection for the country's GDP growth for the current fiscal year, and how does it compare to the fast Advance estimates?
-The RBI had lowered the country's GDP growth forecast to 6.8 percent for the current fiscal year, which is below the fast Advance estimates of 7 percent growth.
What are the potential implications of the global political tensions and tightening of global financial conditions for India's economy?
-The global political tensions and tightening of global financial conditions could lead to stronger headwinds for the Indian economy, affecting its growth and posing challenges for the upcoming fiscal year.
What factors could influence the Union budget in light of the recent economic growth estimates?
-The Union budget could be influenced by the recent economic growth estimates, the deceleration in manufacturing and mining sectors, and the need to address the challenges posed by global headwinds.
What are the potential spillover risks to India's macroeconomy from the global economic slowdown, particularly in Europe?
-The potential spillover risks include difficulties for Indian companies in sectors like auto and IT that are heavily dependent on Europe as a key market, which could face a slowdown or recession.
How might the prolonged uncertainty due to global headwinds impact business confidence in India?
-Prolonged uncertainty could impact business confidence by slowing down private investment, affecting the recovery and expansion of businesses, and creating challenges for the Indian economy.
What are some of the structural reforms and initiatives that could help India navigate the current economic challenges?
-Structural reforms and initiatives could include improving ease of doing business, investing in skills development and hard infrastructure, promoting digitization, and ensuring fiscal discipline to create a conducive environment for private investment and growth.
Outlines
📉 Economic Growth Projections and Sectoral Analysis
The Indian economy is anticipated to grow at 7% in the 2022-23 fiscal year, a decline from the previous year's 8.7%, as per the National Statistical Office's fast advance estimates. This deceleration is primarily attributed to the poor performance of the mining and manufacturing sectors. The manufacturing sector is expected to slow down to 1.6% from 9.9%, while the mining sector's growth is estimated at 2.4%, down from 11.5%. Despite these projections being lower than the government's initial forecast of 8-8.5%, they surpass the Reserve Bank of India's (RBI) projection of 6.8%. The RBI had previously lowered the GDP growth forecast due to ongoing political tensions and tightening global financial conditions. The discussion also includes the analysis of different forecasts, growth projections for various sectors, and the challenges that lie ahead, with distinguished guests Mr. Shubham Bhattachary, Mr. R Gopalan, and Mr. Rajiv Mantri sharing their insights.
🌐 Impact of Global Headwinds on Indian Economy
The script discusses the implications of the first advanced estimates by the NSO and the potential impact of global headwinds on India's macroeconomic situation. It highlights that despite the initial estimates projecting a 7% growth, there could be a statistical correction leading to a possible upward revision of the growth rate. The conversation emphasizes the importance of the upcoming budget, inflation concerns, and the nominal growth rate of 15.4%, indicating high inflation and adverse terms of trade. The potential spillover risks from a struggling European economy and the challenges faced by India's export industries are also discussed. The panelists, including Mr. Mantri, express concerns over the persistent global uncertainties affecting business confidence and the slow recovery and expansion of the economy.
🛠️ Structural Reforms and Private Investment Challenges
The third paragraph delves into the challenges of private investment in India, despite high capacity utilization rates nearing 80%. The discussion points out that while there are positive indicators within the Indian economy, such as a recovery in the services sector and auto sales, private capital expenditure remains sluggish. The panelists, including Mr. Bhattachary, address the structural challenges faced by the Indian economy, such as the need for new solutions to stimulate private sector investment and the importance of government investment in rural infrastructure to boost consumption. The conversation also touches on the government's efforts to induce private sector investment and improve ease of doing business, as well as the importance of skills development and infrastructure.
🌟 India's Economic Resilience Amidst Global Uncertainties
The script highlights India's relative stability and growth amidst global economic challenges. It acknowledges the country's ability to maintain a 7% growth rate despite struggles faced by other economies and inflation concerns. The panelists discuss the importance of structural reforms, such as the implementation of the labor codes and the promotion of manufacturing capabilities through production-linked incentive (PLI) schemes. They also address the issue of energy imports and the government's efforts to reduce dependence on oil through initiatives like ethanol blending and the promotion of electric vehicles. The conversation underscores India's economic management and the need for continued reforms to leverage the country's strengths in the services export sector and deepen global value chain participation.
🏛️ State Government Challenges and Fiscal Reforms
The focus shifts to the challenges faced by state governments in India, particularly in managing capital expenditure and the implementation of structural reforms. The script points out that despite the central government providing significant funds to states, there is a lack of progress in capital investment, which is attributed to the state bureaucracy's limited capacity to handle such projects. The conversation discusses the need for state governments to improve their ability to execute capital expenditure and the importance of public-private partnerships in addressing the backlog of projects. The panelists also touch on the fiscal conservatism of the central government and the expectation of a continued conservative budget to manage fiscal deficit and support private investment.
📉 Inflation Concerns and Future Economic Outlook
The final paragraph addresses the concerns of inflation from the perspective of both the common man and the RBI's role in managing it. The script discusses the structural issues related to state governments and the need for improvements in expenditure and research and development (R&D) to enhance productivity. It also mentions the potential impact of increased customs duties on supply chains and competitiveness in manufacturing. The panelists express optimism about a decrease in inflation levels in the coming year, with expectations that the RBI will not impose further tightening measures that could affect the public. The conversation concludes with a hopeful note on the potential for improvement in the Indian economy's performance and the importance of avoiding further fiscal tightening by the RBI.
Mindmap
Keywords
💡Economic Growth
💡Manufacturing Sector
💡Mining Sector
💡Reserve Bank of India (RBI)
💡Global Financial Conditions
💡Inflation
💡Fiscal Deficit
💡Capital Expenditure
💡Structural Reforms
💡Goods and Services Tax (GST)
💡State Governments
Highlights
The Indian economy is estimated to grow at 7% in the 2022-23 fiscal, down from 8.7% a year ago.
The deceleration is mainly due to poor performance of Mining and Manufacturing sectors.
Manufacturing sector output is estimated to decelerate to 1.6% from 9.9% in the previous fiscal.
Mining sector growth is estimated at 2.4%, down from 11.5% in the previous fiscal.
Current projections are lower than the government's earlier forecast of 8 to 8.5% growth.
RBI's projection of 6.8% GDP growth is lower than the current estimates.
Political tensions and tightening of Global Financial conditions have led to a lowered GDP forecast by the Reserve Bank.
The first Advanced estimates by the NSO project a 7% growth, aligning with economic indicators.
The service sector is picking up, but the manufacturing and mining sectors are not showing good signs.
There is an expectation of a slowdown that will be reflected in the upcoming fiscal year.
The importance of the budget and its influence on the economy is highlighted, especially with the slowing economy.
The nominal growth rate of 15.4% indicates high inflation despite the rise in the value of the dollar.
The terms of trade have become more adverse, indicating stronger global headwinds.
The Indian economy's recovery is taking place, but global headwinds are worsening for the upcoming fiscal year.
Export industries, particularly in the auto and IT sectors, may face difficulties due to a struggling European economy.
Business confidence may be impacted due to prolonged uncertainty from global crises and supply chain disruptions.
Private investment is not picking up despite high capacity utilization, indicating a structural challenge for the Indian economy.
The government has been pushing for private capital expenditure, but it has not been high, posing a concern for economic growth.
Consumption in rural areas has not picked up as expected, affecting investment, especially private investment.
The government's investment in rural infrastructure could kickstart consumption by providing income to rural labor.
Structural changes are required to induce private sector investment and improve ease of doing business.
The need for states to improve their capacity to handle capital investment and reduce backlog in projects is emphasized.
Fiscal conservative budgets are expected to continue, which will be beneficial for the economy by controlling fiscal deficit.
The output gap due to the COVID-19 pandemic is a pressure point for the Indian economy, especially affecting the poor.
Inflation is expected to improve in the next fiscal year, with the Reserve Bank of India positioned to manage it effectively.
The importance of structural reforms such as the implementation of the direct tax code and reduction of customs duty is discussed.
Transcripts
[Music]
foreign
[Music]
you're watching perspective the Indian
economy is estimated to grow at seven
percent in the 2022-23 fiscal down from
8.7 percent a year ago as per the fast
Advance estimates of national income
released by the national statistical
office this clip is mainly due to poor
performance of Mining and Manufacturing
sectors the manufacturing sector output
is estimated to decelerate to 1.6
percent in the current fiscal from 9.9
percent back in 2122 similarly mining
sector growth is estimated at 2.4
percent in the current fiscal as a guest
11.5 percent in 2122 although the
current projections are lower than the
government's earlier forecast of 8 to
8.5 percent growth they are above the
RBIs projection of 6.8 percent remember
the Reserve Bank had lowered the
country's GDP growth forecast from 7 to
6.8 percent for the current fiscal owing
to the continued political tensions and
also tightening of Global Financial
conditions so we'll analyze the
difference in forecasts also growth
projections for different sectors and
the challenges ahead with distinguished
parties joining us on the program
pleased to have in the studio with us Mr
shubham my bhattachary Consulting editor
the business standard thank you Mr
bhattaraji for your time welcome to the
program and joining us virtually are Mr
R gopalan former secretary Financial
Services Ministry of Finance and Mr
Rajiv mantri founder and MD navam
capital thank you gentlemen for joining
us on this edition of the program
Mr gopalan let me begin the program
today with you the first Advanced
estimates by the NSO project a seven
percent growth is this on the expected
lines
well uh from various main indicators
that came about during this year this
was expected manufacturing was in any
case showing not a very good sign right
then Mining and others were also not
very good and services were just picking
up
so it was expected that this would
really come down this year and it has
come down
uh there are two three issues under
which one would like to assess this one
inter say between various components of
the economy how things have moved or
shifted
second will be what the budget holds
what these numbers will influence the
budget as
and third one will be what does what
does it hold for us in 23 24 so these
are some of the things which we should
look at it if you have the time but
basically the fact remains that there is
a slowing down and I believe that this
will get reflected in 43 to 34 as well
right so coming just ahead of the Union
budget uh how significant are these
numbers the estimates of the NSO
will taking on from what Mr gopal was
saying two things very important first
of all uh
there is a lot of I mean we have seen
the deceleration
but the interesting thing to remember is
these is are the first Advanced
estimates
our history of statistical correction
which typically happens because remember
there will be a revision of this number
in May this year then again next year
and there will be subsequently two more
so at least three more usually five
revisions happen and all uh I mean if
you look at the revisions of GDP that
happens the interesting thing is that
they are actually almost changes by
almost one percentage point so seven
percent they would actually when it
finally the numbers are sort of you know
taken on as a final numbers could
actually be closer to eight
that's a significant thing a growth rate
of closer to eight
four twenty two four FY 23 is actually
something which is very impressive so
even as seven percent is good so that's
some so I would say that the numbers
would be we should be looking at what
the subsequent numbers but the point
about that you said about the budget
would be something
that
the important thing to see there is what
is happening on inflation
the interesting thing is that the
inflation the nominal growth rate that
we are looking at is 15.4 percent
which means the Indian economy despite
the rise
in the Valley of the dollar
has actually still recorded a nominal
there's an inflation growth rate of uh
is has been fairly high so which means
that the terms of trade has been even
become even more adverse
that's important because
it actually shows that the headwinds
have become far more stronger from
globally
so two takeaways from this data shows
that first of all that first connection
that I talked about seven to eight
percent shows that the Indian economy
per se is not doing that
the recovery has been taking place and
the recovery is actually starting to
rise and will actually look better
the second thing is that the global
headwinds are possibly even worse so for
23 24
these are going to be even were even
more severe factors to be accounted for
and that is what Finance Minister nimela
sithiraman will be taking on because
when she decides that what are the
numbers that she'll be doing
fiscal deficit
then the growth Capital account capex
growth rate that she's been looking for
these are the constraints that should be
looking for the Indian economy it's fine
the rest of the world the headwinds are
looking as bad probably worse in 23
beginning of 23 than in the beginning of
22. right I'll leave it at that time
okay uh Mr mantri your perspective on
how these you know Global headwinds are
not just persisting but emerging
stronger and which could obviously be
problematic for us how do you see them
posing spillover risks to India's macros
and also uh if you look at the situation
uh particularly in Europe I think uh
their economies are really struggling so
certain of our export Industries are
probably going to uh be hit by that
so if you have a Slowdown or a recession
uh of a severe nature in Europe in 2023
chances are that the Indian companies
for whom you know in the auto sector on
the I.T sector and so on for whom Europe
was a key focused Market uh they could
see uh difficulties in this year and
obviously that will have Downstream or
other that will be a result of a
production uh challenges which will come
up because of a weakened demand in
Europe
and uh net net I feel uh
obviously no one knows when it will end
but the the situation the military
situation in Europe has taken a bigger
toll than most would have anticipated
and the war has gone on longer than most
people would have thought
so uh until things stabilize on that
front uh it will continue to be a
difficult situation for some of the
export industries of India the export
sector is already under immense pressure
Mr bhattacharji but do you somewhere
also see the business confidence also
having taken a hit because of this
prolonged uncertainty one after the
other we've been seeing these Global
headwinds so after the Russia crisis and
of course before that the pandemic as
well because of which the supply chain
disruptions so we've been able to
recover but because of these persisting
headwinds the recovery and the expansion
has not been as fast as we would have
anticipated and if they continue to you
know persist and become stronger as you
said in the coming year as well will the
business confidence also be impacted
somewhere well you know you know that's
a very interesting point that you've
raised why because at the beginning of
this year and I was wondering that I
should have brought my copy of my
business standard
the first day's news
about the Indian economy's business
was rather cheerful and that is exactly
what the point I'm saying if we look at
the auto sales even two-wheelers
you know they're they're falling off has
been arrested three wheelers is actually
recovered
if you look at the services sector the
contact intensive sectors
which were basically ones basically
heard by covet people were not going out
there's been a recovery that Services
sector growth rate according to the PMI
purchased by this index has run into a
10 months High
if you look at any other indicators
coming from within the Indian economy
they're all looking very bright
I wonder but yet as you said private
investment is not taking place why is it
so because as Mr Munster pointed out the
problem that's coming along is that a
company if it wants to expand capacity
if it is solely depending on domestic
demand
that'll be okay but most of our industry
and rightly so we have a strong export
Consignment to think about
and those export Consignments are not
really looking very bright
so the headwinds are therefore just from
there right and that is the thing that
we are you know trying to work out that
which is why you find a very critical
number which economists are talking
about and I'm sure Mr gopalan will be
talking about the private capital
expenditure
is not picking up
it is something which the government has
been pushing the government has been
because the government capital
expenditure has been high but the
private capital expenditure has not been
high and despite the fact that the
capacity utilization is now almost
reaching 80 percent this is the time
when you would expect private sector to
actually start expanding talking about
new construction projects to take up but
that's not happening so that is
something that is a cause for worry and
that is where we shall be hearing more
in terms of what further steps can be
taken on and this is structural
challenge of a new type for the Indian
economy we never have this sort of a
channel we used to have challenges of
different sound you know Supply
constraints a lack of capital lack of
Labor this is a very very I would should
say of our economy of the size that
India has become this is actually a very
smart sort of a development so we shall
actually have to be looking out for new
ways in which to create solutions to
those and that's that's that's where uh
I mean I'll stop okay okay Mr gopalan so
I mean in the face of these newer
challenges what are the newer solutions
that actually we are looking at and we
should actually be uh going forth in
order to navigate these challenges
uh let me take from what uh Obama has
left off uh there is another aspect
which is Should Be watchful of is
regarding the consumption the
consumption in the rural areas is not
really I mean picked up it is trying to
pick up but not really I mean getting us
the attraction which we are required to
have so that has a effect on investment
especially private investment and
therefore that is going to be an issue
how the confidence of the consumers are
able to really come into discretionary
by
with the CPA levels with the core CPA
levels being what it is and CPA numbers
what they are there is going to be it is
going to take some more time for that to
really help in the consumption now
meanwhile how the incomes are going to
cover is something where it comes
through government investment for
instance if the government is going to
do investment uh more on the rural
infrastructure
which is labor intensive obviously I
mean the labor share of the uh or the I
mean I will really go which will give
them enough income to go ahead for
consumption so that is the way the
kickstarting or they're already started
but it has got to expand to expand a
little bit more before the private
sector really thinks the 74 75 capacity
utilization is uh just good enough for
them to go in for further I mean capital
investment well that's going to take
some time the confidence service which
Superman mentioned
are very split they are not I mean
innocent for the consumer side the
investment side and all those kind of
things they are a mixed picture which is
giving at this point in time and with
the headwinds which are going to come in
uh with this it's going to be a problem
at least for in the near future
so what are the structural changes that
are required to be done
well there are quite a good number of
things which uh government is help in
hoping on
for instance how to ensure that the
private sector is induced to invest
so how to create conditions for them to
feel confident that they can invest and
make money out of this
so and how to ensure that ease of doing
business is something which is taken
more uh seriously by the government
and how the government is able to invest
in other things like a skills
development the hardcore hard
infrastructure issues how the
digitization spreads very fast
and these kind of things will uh really
I mean help a great deal in ensuring
that the growth really takes off the way
it should
Mr mantri the fact that you know the new
year started with a lot of Hope and
positivity the fact that India has been
in a relatively better you know spot as
as compared to the other uh leading
economies but the challenges will
continue to emerge stronger and we've
discussed as the global headwinds
continue to persist the forecasts
continue to be revised so the IMF
brought down it number its numbers the
RBI had to bring down the numbers but at
the same time we need to also leverage
our strength existing strength and that
is on the services export sector the
deputy managing director of the IMF had
said that you know in order to do so we
need to extend it to job-bridge
manufacturing exports by deepening the
global value chain participation
complementary structural reforms that we
just spoke about which will boost
productivity formal employment and
exports all of this sounds very good but
in the face of these challenges the fact
is structural reforms is something that
the government is taking care of but on
the export sector the widening Gap that
we are continuing to see this is
something that is going to be extremely
difficult
to no doubt that I think India has done
very well if you look around the world
and look at the state of other countries
uh Even in our own neighborhood the
Southeast Asian economies the other
South Asian countries uh we are really
actually a island of uh kind of
Excellence or island of stability in
this region we are able to rest a seven
percent growth in a year like this where
frankly most economies have really
struggled uh for the most part inflation
has also not been that severe in India
uh and and overall I think it speaks to
the excellent economic management by the
government that we managed to achieve
this now having said that I do believe
uh you know many of the structural
reforms need to keep getting that
impetus for example uh the label or uh
codes which were passed by parliament
are yet to be implemented by state
governments and we are still waiting for
that to happen uh I think it's been
probably close to two years now since
Parliament cleared them but there is no
uh actually nothing in the media or no
information available as to when it
might get implemented by States
uh and and if we are looking to balance
our economy I think we are already sort
of lying heavily on Services exports I
do not I'm not of the school of thought
that more can be done on Services
exports I do believe that India needs to
build up manufacturing capabilities
and uh much has been done by the
government on that front actually with
the pli schemes and other initiatives uh
to bring up like domestic industry so so
uh on the particular point of uh
uh the dependency that we have on for
example energy Imports which put a
certain macroeconomic pressure on the
country I think government has also been
doing everything that it can in terms of
mobilizing sort of uh the sugar sector
to go for blending or ethanol and uh
achieve achieve uh you know some level
of blending so that we are able to
reduce that marginal amount of oil
import
electric vehicles so if you look at
whether it's uh two wheelers three
wheelers or four wheelers uh India is
electrifying its transport its uh
vehicle base very rapidly I think it is
happening most rapidly with three
wheelers than with two wheelers and then
four wheelers will take some more time
probably because of the cost aspect like
the electric vehicles tend to be more
pricier and what India actually needs is
like a four lakh five lakh electric
vehicle we have not got to that price
point yet so so my view is we should
keep doing whatever we can there will
always be you know certain Global
pressures and shocks like that I mean
frankly when has that not not happened
right like if you look back over 15 20
years it's always been something or the
other which is brewing and kind of
disrupting uh uh uh as a force but but
as long as we continue to do whatever we
can then you know we will somewhere come
out ahead when the headwind started to
Tailwinds
okay so uh you know that optimism Mr
bhattachary explains the transformation
that India has seen with relative ease
in several sectors but when we talk
about the structural reforms how much of
an important role does simplification of
the goods and services tax have to play
that is one area that we've been
speaking about but it's not been
implemented it's not been done uh so far
so how much of a roadblock is that also
causing that is quite something in the
sense that the tax rates also I mean
let's take cement cement gets taxed at
28 percent now cement is both used by
the individuals I was building by
anybody as well as by the industry so uh
that's a that's that's the tax rate that
frankly is something which is creating
difficulty uh but then it's also
something on which both the center and
the states have to come together so GST
reform and if you mean on that context
reducing the uh sort of the the whatever
it's called the the basic rate to
something like uh 14 or something is
something that's definitely going to be
very good for the economy there's no
doubt about it uh I would say that the
one problem that's coming up and which
has not been flagged is that the States
you remember this year the central
government has and last year too but
since this year definitely has given
about one lakh crore that's one trillion
to state governments to jump start
capital investment
from the data that comes up it shows
that the states have not really moved on
it much
and I have a reason to understand why
the reason is States per se are very
good at handling consumption expenditure
they are not the state Machinery the
state bureaucracy is not almost in Most
states very good at handling capital
investment and this is actually hurting
this year we would expect the government
to actually push more central government
to push more money to the states to push
capital expenditure but states that is
one structural reform that is very
necessary for the states to ramp up in
the capacity within the bureaucracy to
be able to take projects and deliver
this is something which the states have
actually been not only lagging but
they've also been on defensive they've
not they've been not been coming up to
say where is the problem
PPP adjustments I mean public private
partnership writing those things getting
those projects implemented Most states
have a tremendous backlog there that is
what you're seeing
Mr gopalan was talking about rural
development not happening well I can
assure him one of the reasons why not
threatening is it's not supposed to
putting in consumption money
investment by the state governments is
not happening
and that is where that is where a
serious challenge needs to is has
developed and needs to be sorted or does
it say these are new economy challenges
for the Indian India never used to
happen we never had the cash to be able
to give that money now the cash is there
it's not getting spent so that's one
major thing
a very good reform that the central
government has done is being fiscally
conservative
for the last two years Finance Minister
has been presenting a conservative
budget
we are very hopeful that she'll be
continuing that Trend because it's very
nice to under
promise and over deliver
and that is something that we'll be
expecting this year uh that actually
will be very good for all round because
it will push down the fiscal deficit
it will actually ensure that other
pressures on the private investment do
not come up the government is spending
more
the government's borrowing calendar is
actually making us hopeful that yes that
is what will be happening
you would have noticed that citibank's
latest reporters say that the current
account deficit of India which they had
picked at 3.7 percent they have scaled
it down to less than three percent which
shows that the economy has been able to
start balancing itself much more
so you know I'm talking about the hard
numbers the only challenge that is there
which is because of the covet cap
there's an output Gap in the Indian
economy what Indian economy should have
been at this stage compared to if the
covet had not happened there that Gap is
naturally going to hurt the poor more
because they are their bottom of speech
and that is where the challenge is but
for that consumption to be actually
brought back
several layers of the economy have to be
working along
of which I think one major thing which
the state government is the state
government remember they account for 65
percent of the government budget of the
total government budget it's not working
as of now so that's that's something
that we need to work on but that output
but even after that there will be that
Gap and that Gap is the pressure point
in the Indian economy in terms of the
consumption which which which which will
take a bit more time to create through
but it was something which kovid had
dealt and uh we are doing I mean most
sectors of the Indian company have
actually dealt with it far more
responsibly than many other economies
but you know since you spoke about uh
hurting the masses let me take one
question on the inflation problem from
Mr gopalan Mr gopalan from the common
man's perspective how big a worry is
inflation going to be both from our
perspective and also from the
perspective of RPI in taming inflation
in the times to come
okay let me I mean I mean start off from
what Superman left I mean there are
structural issues which uh he pointed
out in regard to state governments there
are state governments who have been able
to uh very well improve me not uh
implement the capital expenditure
program there are good set of States
including States they come and not we
have been doing quite a good amount of
capital expenditure first the problem
there is that I mean the capacity of the
administrative system to absorb capital
expenditure is very limited because of
the way in which the private sector has
to be pulled in by the states to get the
capital expenditure conducted it's not
it is not done by the state government
themselves it is put in by various
contractors and others who are able to
be pulled in to get this expenditure
done that has not really I mean taken
off in some states but most States this
really happen that's an encouraging sign
I have seen on structural reforms I mean
before I get into inflation side there
are issues relating to uh what you call
that I mean r d issues which have to be
tackled how to ensure that India as a
system is able to improve its
expenditure and r d which will enable it
to really working to get into some
Innovative things which can really push
up the productivity side second thing I
am worried about is on the customs duty
increase which is taking place it will
hurt the supply chain uh seamlessly
across all countries we ensure that
competitiveness is ensured in our
manufacturing so that's an area where we
must be very careful and be very I mean
wise in doing that there are some areas
where it needs to be done but there are
some areas that we need to avoid we
should take a carousel view on that on
the income tax side I have a feeling
that the Myriad things which are going
wrong if a direct tax code is going to
be implemented it will give so so much
of certainty to the income tax tax
structure which I think is going to be
very useful for kickstarting Investments
on the inflation side as I say the
inflation is because of the commodities
prices are going down and we see WPA
showing signs of I mean deceleration
very drastically
the inflation levels are going to really
go down next year
I expect the CPA to be around about
average for next year is likely to be
about 5.4 to 5.5 per a five percent
the core is a big problem for me uh it
will take another six to seven months
for the core inflation to really come
down which will enable people to
Industry to pass on uh
uh I mean the price I mean uh increases
of inputs but by the time input prices
could have softened because commodity
prices are softening so generally I have
a feeling that in 2324 there is going to
be a good Improvement in the inflation
levels and RBA will be in a position to
work on that uh will be advantages to
them to look into how the I mean I think
let's all hope that there's no more
tightening from the RBI which eventually
impacts our pockets so with that I'll
have to wind up the program time allows
me to take up only that much on this
additional perspective thank you to all
of you for joining us on this edition of
perspective sharing your thoughts with
us in our viewers and to you viewers
thank you very much for your time I'll
see you same time on Monday now take
good care of yourselves keep watching
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