Skip to main content

India’s macroeconomic resilience amidst global fragility: facts, factors, forecasts

By IMPRI Team 

Under the series, The State of the Economy – #EconDialogue, Center for the Study of Finance and Economics (CSFE), IMPRI Impact and Policy Research Institute, New Delhi organized #WebPolicyTalk, a distinguished lecture on the topic India’s Macroeconomic Resilience amidst Global Fragility: Facts, Factors and Forecasts, by Dr Deepak Mishra. Dr Deepak Mishra is the Director and Chief Executive of the Indian Council for Research on International Economic Relations (ICRIER), New Delhi. The session was chaired by Dr Rafiq Dossani, Director, RAND Center for Asia Pacific Policy, a Senior Economist and the Professor of Policy Analysis, Pardee RAND Graduate School.
The discussants of the event were Prof Nilanjan Banik, Professor and Program Director (BA, Economics and Finance), Mahindra University, Hyderabad, Dr Pooja Misra, Associate Professor and Area Head, Economics, Birla Institute of Management Technology, Greater Noida and Mr Arvind Chari, Chief Investment Officer, Quantum Advisors, Mumbai.
Prof Rafiq Dossani started on a high note by saying that India’s Economic record for this year would be one of the best in the world. It’s a great performance that’s expected after some years of battling covid and other disruptions. To introduce the topic to everyone, he showed a graph comparing US monthly inflation rate and the Interest Rates by the Fed. For the Fed, according to him, the main priority is inflation targeting. So they would increase interest rates aggressively irrespective of other ongoing events in the economy. Treating interest rates as the biggest risk to future economic growth. He further posed a question for discussion- if interest rates keep on increasing till inflation comes down to the target of 3-4%, what would the impact of that be on the world economy? With this question, he invited Dr Deepak Mishra to begin the lecture.
Dr Deepak Mishra a brief introduction to the topic, giving context and background. He started by saying that we live in interesting times, amidst a real war and several proxy wars- including the trade wars between the two largest trading nations. We are still living through the pandemic, which hasn’t gone away in many parts of the world. We are also seeing unprecedented levels of inflation and a substantial breakdown in global supply chains. Even bigger, long-term structural issues such as Climate Change, disruptive technologies and automation are things we witness today. So we couldn’t be living in more challenging times for the world economy, more challenging than ever before. Historically, he says, when the world sneezes, India seems to catch a cold. In the past, every slowdown in India has coincided with a global economic shock.
Every big global shock has affected India, be it- the two oil price shocks, the collapse of the Soviet Union, the Iraq War, the Asian Financial Crisis, the Dotcom Recession, the Global Financial Crisis and the COVID-19 Pandemic. In terms of the inflation rate, India’s inflation rate has remained anchored around its pre-pandemic expectations compared to other G20 and ASEAN6 countries. Talking about economic growth, India is projected to maintain its status as one of the fastest countries among its G20 and ASEAN peers. The Indian economy has indeed been more resilient. Dr Mishra then talked about the reliability of this analysis and its possible explanations. To analyse forecasts and what the future holds for the country, Dr Mishra spoke about India’s Economic Outlook.
The scenarios can be broadly classified into three: Optimists, Pessimists and Realists. The optimist narrative says that the economy is well-poised to take advantage of the post-COVID recovery. It also says that our reform credentials are strongly established as we did not undertake massive stimulus or populist measures. On the other end of the spectrum are pessimists. Their narrative says that the reforms made are pro-business and not pro-market, which is leading to a concentration in key industries, thereby reducing competition which is the oxygen required for creating growth and employment. Critics also argue that there is centralisation of power, funds, decisions and weakening of institutions. In the middle lie the Realists who believe that we would have a strong post-COVID recovery, but some decline in potential growth as a result of the learning crisis during the pandemic which might have long-term consequences.
Summing up, he says that India has indeed been an island of macroeconomic and financial stability in an ocean of high turbulence and uncertainty. This can be explained by sound economic management, an unfortunate turn of global events, inconsistent policies of the developed world and a dollop of good fortune. But this is only a short-term respite. The jury is still out on whether India can turn its current positive momentum into a sustained medium-term improvement. He ended his piece by saying that there are good reasons to be Cautiously Optimistic.
Mr Arvind Chari was invited to give a market perspective on economic data, both short-term and long-term. He spoke about India’s history and the long-term journey that India has taken. He mentioned how the reforms made in the late 70s and early 80s, irrespective of the government, have really shaped investor sentiment, especially those looking for long-term investments. Most governments have followed a blueprint of reforms, which has meant that Real GDP has continued to grow at 5-6%. Indian GDP and Indian markets are fairly representative of the economic trends, which is not the case in China, where investors haven’t commensurately invested.
Dr Pooja Misra spoke of various macroeconomic indicators. Positives for India include structural reforms, including the supply side reforms which will have a multiplier effect in the long term, thus working in our favour. Reshoring of supply chains will help us too. As far as the services sector is concerned, we can see a revival there. In the international Economic Resilience Rankings released by PHDCC, India ranks as the 2nd most resilient economy in 2022. That being said, we need to be careful. We must keep an eye on inflation and exchange rates. Keeping inequality levels in mind is also very important. She summed up by saying that a good story is being unfolded and India is turning out to be a resilient economy in today’s day and time.
Prof Nilanjan Banik made several comments to add to the previous speakers and brought about many pertinent questions. Towards the end of the session, all speakers answered several queries of the participants and enriched the event.
---
Acknowledgement: Tripta Behara, a research intern at IMPRI

Comments

TRENDING

Abrogation of Art 370: Increasing alienation, relentless repression, simmering conflict

One year after the abrogation by the Central Government of Art. 370 in Kashmir, what is the situation in the Valley. Have the promises of peace, normalcy and development been realised? What is the current status in the Valley? Here is a detailed note by the People’s Union for Civil Liberties , “Jammu & Kashmir: One Year after Abrogation of Art. 370: Increasing Alienation, Relentless Repression, Simmering Conflict”:

Repeated failure to appoint Chief, other commissioners undermining RTI Act

By Anjali Bhardwaj, Amrita Johri* The post of the Chief Information Commissioner of the Central Information Commission (CIC) has fallen vacant with the retirement of Bimal Julka with effect from August 27, 2020. This is the fifth time in the last six years that the Commission has been rendered headless. Four posts of information commissioners are also vacant in the CIC. Currently more than 35,000 appeals and complaints are pending in the commission resulting in citizens having to wait for months, even years for their cases to be disposed, thereby frustrating peoples’ right to know. Since May 2014, not a single commissioner of the CIC has been appointed without citizens having to approach courts. The failure of the government to make timely appointments of commissioners is a flagrant violation of the directions of the Supreme Court. In its February 2019 judgment, the apex court had categorically stated that if the CIC does not have a Chief Information Commissioner or required strength

Sunil Gavaskar, G Viswanath rated Andy Roberts best fast bowler they ever faced

By Harsh Thakor  The West Indies pace quartet or battery of the 1970’s and 1980’s truck terror to deliver a knockout punch, like never in cricket history. One was reminded of bomber raiding an airbase or a combing operation. Andy Roberts was the pioneer in orchestrating or propelling the most fiery and lethal pace bowling attack ever in the history of the game. Simply the godfather of Modern West Indies fast bowlers. He spearheaded the pack from the mid 1970’s .Without Andy the talent of Michael Holding, Joel Garner and Colin Croft would never have blossomed.Michael Holding credits Andy for shaping his great bowling career, by infusing vital elements.

Adivasi land rights question in Telugu states: Digitization process without transparency?

By Dr Palla Trinadha Rao  This paper examines whether the Land Records Modernization Program initiated by the successive governments in Telugu States is beneficial to tribals in the Scheduled Areas in the light of special protective Land laws that are in force there. Digitization process or regularization of land records or land surveys without transparency will result in disempowerment of Adivasis. This can be tested in the case of Adivasis in the Scheduled Areas of Telugu States. British colonialism, through its land revenue policy and elaborate exploitative bureaucratic structure, made land alienable on a large scale especially in tribal areas. 1 Land and the forest produce remain the main source of tribals’ livelihood; but availability of land is restricted by forest reservation on the one hand, and non-tribal encroachment on the other. 2 In the Andhra Area, there were certain laws including the Agency Tracts Interest and Land Transfer Act, 1917 that existed before the inaugurati

Ultimate champion in crisis, arguably best ever skipper: Created history in Aussie cricket

By Harsh Thakor  In the history of cricket few cricketers knit and propelled a cricket team or had such profound influence on the game as Ian Chappell. Ian Chappell was responsible for converting a bunch of talented individuals into a world beating side, giving a dramatic turn to Australian cricket. Few cricketers ever led such a renaissance.

Largest democracy in world has become weakest at hands of fascist Hindutva forces

Note on “The Nazification of India”, a report released By Justice For All: *** This report, the Nazification of India, compares how Hindutva ideology not only is inspired by Nazis and Fascists of Europe, but their treatment of the Muslim minority closely follows developments that resulted in pushing Jews to the gas chambers. Situation is indeed quite alarming. The report says that the largest democracy in the world has become the weakest at the hands of the fascist Hindutva ideology. India today is ruled not just by a political party the Bharatiya Janata Party (BJP), but its mother organization the Rashtriya Swayamsevak Sangh (RSS). Because the BJP’s government policies are linked to extra-legal enforcement by RSS paramilitary street power, this report has coined the term “The BJP-RSS regime” to reflect their intrinsic links and collaborative relationship. The Nazification of India report marks the anniversary of the Gujarat pogroms of 2002 against Muslims which propelled the BJP-RSS

BSF's unconstitutional, whimsical order violates life, livelihood of Dalits, minorities

Kirity Roy, Secretary, Banglar Manabadhikar Suraksha Mancha (MASUM), writes to the Chairman, National Human Rights Commission: *** I want to attract your attention towards the illegitimate restrictions on the life and livelihood of the villagers of Paschim Sahebganj village under Dinhata - II Block and Sahebganj police station in Cooch Behar district of West Bengal by the Border Security Force personnel attached with Dharala Border Out Post under 138 Battalion BSF. The population of Paschim Sahebganj village is around 1480, where almost 75 percent of the villagers belong from Hindu Scheduled Caste (Dalit) and 25 percent from minority Muslim backgrounds.The main occupation of the villagers is agriculture. About 260 acres of cultivable land in the village that belongs to the villagers is located outside the border fencing, which is heavily guarded by the Border Security Force (BSF). The BSF regulates the ingress and egress of the villagers to their fields through the fencing gates that a

Varanasi social worker who has devoted her life for the ultra-poor and the marginalized

Passion Vista and its partners profile Founder and Managing Trustee Shruti Nagvanshi as  someone whom women leaders look up to: *** Shruti Nagvanshi, a social worker and human rights activist based in Varanasi, Uttar Pradesh, has devoted her life to reaching out to the ultra-poor and marginalized communities in India. Born in Dashashwmedh, Varanasi on 2 January 1974, she married Dr Lenin Raghuvanshi on 22 February 1992 and has a son, Kabeer Karunik, a Business management Graduate who is also a national level snooker player.

An approach to lake/pond restoration by Ramveer Tanvar, Pond Man of India

By Monami Bhattacharya*, Mansee Bal Bhargava**  Lakes/ ponds are often referred to as an elixir of life, a living ecosystem that adds incremental value to the larger biota. Across the tropical landscape of the country lakes/ ponds are a common sight. Lakes/ponds have always shaped the life and livelihood of those dwelling in and around it. The dependence of the local population on these natural resources of water is noticeable since time immemorial. However, they are fading fast in both rural and urbanscapes from the popular parlance with the advance of humanity. It has been a popular notion to value land more than the waterscape and hence these nurturers of life are under stress in several areas. In many instances, these once beautiful waterscapes referred as the ‘Eye of the Earth’ are mostly now only dilapidated garbage dump yards emitting foul smell with no sign of a healthy ecosystem.

Urban crisis: Impact of erosion of democratic framework on Indian cities

By IMPRI Team  On 13th February, 2023, IMPRI Impact and Policy Research Institute, New Delhi in collaboration with ActionAid Association India arranged a book launch followed by lecture series under the title “India’s G20 Presidency & the Urban Agenda for the Developing Countries”. The event was held in Indian International Centre (IIC) Annex, New Delhi. The event began with the book inauguration session, under the honorary presence of Mr Sitaram Yechury, former Rajya Sabha member and General Secretary, CPI (M), accompanied by Mr Sandeep Chachra, executive director, ActionAid Association India. Session 1 | Book Launch: ‘Cities in Transition’ by Mr Tikender Singh Panwar The book launched was “Cities in Transition”, written by Mr Tikender Singh Panwar, former Deputy Mayor, Shimla and a Senior Fellow at IMPRI. Beginning with brief remarks on his book, Mr Panwar outlined the basic subject matter and the purpose behind writing the book, which he considers as a by-product of his experien