Indian economy likely to grow at over 7% in current fiscal year: Arvind Panagariya
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Expressing optimism over India’s economic situation, former Niti Aayog vice chairman Arvind Panagariya has said that the Indian economy is likely to grow at over 7 per cent in the current fiscal year, and he added that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises. He further said recessionary fears have been around for a while but so far neither the US nor the EU has gone into recession. He said ‘From the viewpoint of India, in terms of headwinds originating abroad, the worst is probably behind us’.
Panagariya said capital outflows induced by the hikes in policy rates by the US Fed Reserve had placed the rupee under considerable pressure. He said ‘Those flows have reversed with positive net portfolio inflows in November’, and added that inflation in the US is also coming down, suggesting the worst may be over in that country as well. But in the meantime, according to him, the rupee has appreciated against currencies such as the Euro and Yen which may contribute to weakness in exports in the coming year. He noted even prior to this episode, the rupee had been overvalued. He said ‘So, I would lean in favour of further depreciation of the rupee against the dollar’.
On unemployment, he said going by the Periodic Labour Force Survey (PLFS), which is the most reliable household survey available, he does not see that the unemployment rate is high. He said ‘Higher unemployment among the youth is not a new phenomenon. This rate has always been higher than the overall rate because youth do not take the first job they are offered. Instead, they wait in the hope of getting a better offer’. He also pointed out that in recent years, due to rising urban incomes, parents are able to support their children for longer. He said ‘As a result, the waiting period has become longer, which has resulted in an upward shift in this rate’, but pointed out that as per PLFS, the unemployment rate among those aged 15 to 29 years has fallen from 20.6 per cent in 2017-18 to 18.5 per cent in 2020-21.
