CEA Nageswaran Claims India is Better Placed to Face Inflation

India faces persistent risks of inflation but is in a better position to face the situation than many developed and developing countries, chief economic adviser V Anantha Nageswaran said on Tuesday. He also said that the risk of stagflation in the economy was rather low.

India's real GDP increased by 8.7% in the fiscal year ended March 31, 2022, compared with a contraction of 6.6% in the year-ago quarter. In the January-March quarter, the economy grew 4.1%.

Nageswaran recorded a strong recovery, with all other sectors except hospitality, tourism, and leisure contact services recovering compared to pre-pandemic levels, and the economy showed strong growth in FY22, driven primarily by exports and government spending. 

When asked about the volatile fiscal situation in FY23, Nageswaran said inflation could mean that nominal GDP for the year was higher than the projected 11.2%, helping to curb the budget deficit. 

Mr. Nageswaran discussed economic headwinds, primarily due to global affairs, and said the global highs of import-dependent commodities were problematic in terms of crude oil, edible oils, fertilizers, and metals. In particular, he cited monetary tightening in most countries, supply chain bottlenecks, major input delays and shortages, and a global recession that could impact India's export growth.