Interview | Domestic demand, higher capex behind Indian economy's resilience post Covid: CFA Institute's S Ramachandran
Live Mint, Ramachandran points towards the country's "conducive environment" to attract global investments, the economic prospects vis-à-vis China and other Asia Pacific (APAC) nations, how India can leverage from advancements in artificial intelligence and whether its net-zero goals are aligned with the growth vision. Edited excerpts from the interview.
In recent years, the global economy has been struggling with multiple challenges, including Covid-19, high inflation, and the Russia-Ukraine war. In contrast, the IMF’s GDP growth forecast for India for 2023 is 6.1%, and there could be a potential upside to these numbers as the first quarter FY24 growth rate was a robust 7.8%.
The IMF also expects that India will become the third-largest economy by 2027-28, based on current projections. This is a conducive environment for India as an attractive destination for global investments, and it is reflected in robust inflows from global investors (both FPI and FDI) and elevated valuations for public markets in India.
The growth forecasts are buttressed by capital spending on infrastructure, with the central government’s capex increasing from 12% of total expenditure in 2017-18 to 22% in 2023-24, which can potentially crowd-in private investments. The government has also rolled out subsidies to take advantage of shifting global supply chains.
Despite this thrust in manufacturing, it is notable that the services sector, particularly financial services, banking, and insurance, continues to be a major source of foreign direct investments (16%), ahead of computer software and hardware (15%), and telecom (6%) in 2022-23. Exciting news! Mint is now on WhatsApp Channels :rocket: Subscribe today by clicking the link and stay updated with
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