India is not defending the rupee as it is capable of taking care of itself, Chief Economic Adviser V Anantha Nageswaran said adding that India should be able to grow at about 7 per cent annually this decade. The government’s top economist is of the view that Indian fundamentals are not such that we need to defend the rupee, instead, “the rupee can take care of itself”.
Speaking at the 15th Mindmine Summit, the CEA said, “I think India isn’t defending the rupee. India is just making sure that the market forces and the economic fundamentals direct the rupee in a particular direction and making sure that it is happening smoothly and gradually.”
The Indian rupee rose to an over one-month high against the US dollar today as it closed at 79.1475 per dollar, compared with the previous close of 79.5225.
India’s growth rate
CEA Nageswaran exuded confidence that our trend growth rate will easily be 7 percent per annum for the remainder of the decade and beyond. Although international agencies saw India’s trend growth rate at 6 per cent, he was far more optimistic and saw at least another 100 basis points of upside on account of the fact that India had “paid it’s dues” in the previous decade.
“I am thinking 6 per cent as the very easily attainable growth rate. I am adding 0.5 per cent coming from the capex boom. Another 0.5 per cent will come from the digital public infrastructure we have created. We haven’t fully understood the impact it has had on formalisation and access to finance, and therefore its positive contribution to economic growth,” CEA Nageswaran stated.
If in some years we have the global cycle operating in our favour, that export growth will give us an additional icing on the cake, which can take you to 7.5-8 per cent, he underscored.
He further added that both the banking sector and corporate sector have been repairing their balance sheets (in the last decade) and “that repair work is done.” So, both the banking system is willing to lend and the corporate sector is waiting to borrow and invest, he said.
The investment spending which we experienced back in 2006-2012 is going to come back, Nageswaran noted.
Meanwhile, India’s central bank – Reserve Bank of India has forecast that India’s GDP will grow by 7.2 per cent in FY23.
