Need to keep eye on geopolitical situation: CEA V Anantha Nageswaran
crude oil prices and tightening global monetary conditions pose a risk, said chief economic advisor (CEA) V Anantha Nageswaran.
The geopolitical situation needs to be closely watched, he told ET on the sidelines of the International Monetary Fund (IMF) and World Bank meetings in Marrakech, Morocco.
«At the moment, we do not see it (developments in West Asia) as something that causes an immediate and significant economic impact, but we will need to watch it closely,» said Nageswaran.
He said India's retail inflation is likely to be plus or minus 20 basis points of the Reserve Bank of India's 5.4% forecast for this financial year.
A basis point is a hundredth of a percentage point.
«But the fact that inflation has come down sharply tells us very clearly that what we experienced in June, July and August was seasonal, rather than something fundamental. Overall, inflation is not a big concern,» said Nageswaran.
The CEA said capital investments by the private sector rebounded in 2021-22 and 2022-23.
«You also get a sense of it from import of capital goods, and capital goods data in IIP (Index of Industrial Production). In August, the growth was 12.6%, a nine-month high, which signifies a pickup in capital formation,» he said.
Consumption should also hold, he said.
On the IMF's decision to raise India's GDP growth forecast to 6.3% from 6.1% estimated earlier, the CEA said the agency's «forecast for the Indian economy on a five-year basis is far more constructive».
«They don't see a huge rupee depreciation. They do see the economy at close to $5 trillion in 2026-27,» he said.
On China, Nageswaran said the country's policymakers are aware of their economic challenges.
