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India on the verge of a major economic recovery, says Niti Aayog VC Rajiv Kumar

NITI Aayog Vice Chairman Rajiv Kumar said on Sunday that India was on the verge of a major economic recovery. He said talk of possible stagflation is “overhyped” as a solid economic foundation is being laid with the government’s reforms over the past seven years.

“India will remain the fastest growing economy and all other economic metrics are actually quite within range,” Kumar said. “Given all the reforms we have carried out over the past seven years, and given that we are seeing hopefully the end of the COVID-19 pandemic, and the growth rate of 7.8% we will achieve this year (2022-23), a very solid foundation is now laid for a further rapid increase in economic growth in the years to come.”

“I am sure the Reserve Bank of India has it (inflation) well under control and will take necessary action if and when needed.”

He said that in the past the government had taken steps to reduce the tax burden. “And I think now is the time for states to come forward if they feel it needs to be done,” Kumar added.

The latest FICCI economic outlook survey on Sunday released a median annual GDP growth forecast for 2022-2023 at 7.4%, with a minimum and maximum growth estimate of 6.0% and 7.8%, respectively.
In the survey, there was a unanimous opinion on monetary policy that the Reserve Bank of India will refrain from undertaking a policy reversal in the next monetary policy to be announced on April 8, 2022.

“RBI should continue to support the ongoing economic recovery by keeping the policy repo rate unchanged at the April announcement,” the survey said. Growth impulses are still nascent and consumer confidence has been subdued and has yet to return to pre-pandemic levels.

Economists were of the opinion that the RBI would consider reversing its stance in the second half of the current year (2022) and we can expect a rate hike of between 50 and 75 basis points by the end of this exercise.

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