IN a sign that inflation is finally being brought under control, India’s wholesale inflation has declined to 4.95 percent. This has led to a fall in prices of food articles, basic metals, textiles, chemicals and chemical products. Indian economy is doing well overall despite global headwinds and is set to emerge as the fastest growing world economy. Analysts are bullish on India, claiming that even if the major economies enter a recession, the impact on the country will be limited due to its strong macroeconomic fundamentals. The World Bank, International Monetary Fund and Credit Suisse have expressed optimism about the state of Indian economy and expect it to withstand the fallout of the Russia-Ukraine war and the Covid pandemic hangover in other parts of the world.
The World Bank has projected Indian economic growth at 6.9 percent for 2023-24, and it expects the growth rate to slow to 6.6 percent in the next financial year. What is more, the bank has predicted India’s economy to grow at the highest rate among the seven largest emerging-market and developing economies (EMDEs). The Ministry of Statistics issued its first official estimate last week, predicting that the Indian economy will grow at a 7 percent annual rate in the current fiscal year. These projections are significantly lower than the government’s previous forecast of 8-8.5 percent growth, but higher than the RBI’s forecast of 6.8 percent. The International Monetary Fund (IMF), on the other hand, forecasts 6.8 percent growth in the current fiscal year and 6.1 percent growth in 2023-24.
These varied growth projections, however, present a stable picture of Indian economy. The war in Ukraine thus remains a danger, though. If it drags on, the global economy, and with it, the Indian economy, is likely to come under severe stress again. Therefore it is incumbent on the world to come together to resolve the crisis in Ukraine and find a solution that addresses the concerns of all the parties involved. Otherwise, as prophesied by leading economists, the world is heading inexorably toward recession.
However, as things stand, it looks unlikely that the Ukraine war will come to an end anytime soon. It has become an unremitting tug of war between Russia and NATO, where a defeat could drastically reduce the losing side’s geopolitical influence. So, the best solution to the crisis has to be a win-win for both. But neither side has shown an appetite for it so far. One can only hope that in the coming weeks and months, efforts for peace will gather momentum.
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