India's growth to slow down in H2: Jahangir Aziz, JP Morgan

economictimes.indiatimes.com:

Jahangir Aziz, head of emerging market economics at JP Morgan, tells Gayatri Nayak and Bhaskar Dutta. Edited excerpts:India appears to be an outlier so far and the forecasts also show it to be the fastest growing major economy. What makes it so and how long? Our view is that in the second half of the year, growth is going to slow down.

And although this might seem odd, some slowdown in growth is needed to support macroeconomic and financial stability. You do not want excessively high credit growth fuelling growth. This is not what the consensus view is.

This is not the RBI's view; this is not the government's view; or the market view. As much of recent growth in India has been driven by exports, especially of services, with the global economy slowing in the second half of the year, including the US entering a modest recession, India's growth will also slow. But macroeconomic stability should not be impaired given India's large foreign exchange reserves and the government holding to its fiscal deficit target.Isn't a growth slowdown going to hurt the economic aspirations? If growth slows down and the government does not do anything major to jumpstart the economy, or the RBI does not do something to artificially provide stimulus, we should be able to get through the next nine to 12 months as long as we are willing to accept that slowing growth is not a bad thing.

We need growth to slow down, and it isn't slowing as quickly. This is why core inflation is also sticky. If it remains elevated for too long, the fear is that this might unhinge already high inflationary expectations.How do you expect Indian monetary policy to be conducted? There's a belief that India could chart its own path based on its own inflation forecasts. N