The Indian economy recovered from the Covid-induced downturn during 2022 and is poised for further improvement in the coming quarters though downside risks emanating from geopolitical tensions, strengthening dollar and elevated inflation will continue. The positive trajectory in the growth trend and improved fundamentals will help the nation in neutralising the impact of global headwinds which are expected to have a bearing on the country’s exports in the months to come. The challenges before the government and the Reserve Bank in the new year would be to arrest inflation, check declining value of rupee against US dollar and promote private investment and growth, with a view to ensure that the country remains one the fastest growing major economies of the world. India recorded a growth of 9.7 per cent in the first half of 2022-23 (April-September), as against 5.6 per cent in Indonesia, 3.4 per cent in the UK, 3.3 per cent in Mexico, 3.2 per cent in the Euro area, 2.5 per cent in France, 2.2 per cent in China, 1.8 per cent in the USA and 1.7 per cent in Japan. ”From the viewpoint of India, in terms of headwinds originating abroad, the worst is probably behind us … Overall, I still expect us to end the current fiscal year with a growth rate exceeding 7 per cent. ”Next year, the 7 per cent growth rate should sustain assuming the forthcoming Budget does not have any negative surprises,” opined former vice-chairman of the Niti Aayog and noted economist Arvind Panagariya. The biggest problem the economy faced was persistent high inflation which remained above the Reserve Bank’s comfort level for the most of the year. Infact, the RBI had to file a report to the central government on why it failed to check inflation. The depreciating rupee against the US dollar too remained a challenge for policy makers making imports costlier and in turn impacting the country’s current account deficit. The rupee, according to analysts, will continue to remai
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