Amid harsh economic realities triggered by the Russia-Ukraine conflict globally, the Indian economy seems to be daring to remain strong. We’re not just talking about growth and stability, but foreign reserves are also high. Data from the Department of Economic Affairs, as of January 28, 2022, reveals foreign exchange reserves hit US$ 634.287 billion. Although there has been a decline in economic expansion, this is likely not to remain the same for a long time. The Asian Development Bank estimates that the country’s growth rate will moderate to about 7.55 between 2022 and 2023, before taking an uptrend towards the 8% mark and above, reports pocketoption.
The Indian economy is in good shape as the country’s GDP growth rate and foreign exchange reserve are high, former RBI Governor Bimal Jalan said on Thursday.
The conflict in Ukraine is among the main factors that may affect growth when energy retailers start passing down the high costs to consumers. Covid 19 also threatened to wipe away years of hard work in India but the government’s quick response was able to curb it. The rise in vaccination rates is a sure sign that the COVID-19 pandemic will subside in the coming days.
The United Nations downplayed India’s growth for 2022, projecting it at 4.6%, which is about two percent less than the earlier forecasted figures. According to the UN, this is anticipated to be a reflex of trade sanctions in Russia and financial instability being witnessed around the globe currently.
India which has emerged as the fastest rising economy is foreseen to join the top three world economic regimes within 15 years. The country is currently the second-largest producer of fruits, and the number one exporter of lemons, limes, mangoes, and bananas. Agriculture, chemical production, and the general manufacturing sector will be the biggest contributor to the GDP of India in the coming years. A small percentage of the growth will come from aquaculture and fishing. According to McKinsey Global Institute, this country should raise employment numbers and generate 90 million non-farm jobs by 2030 to be able to achieve its goal of being a world economic superpower.
Jalan’s thoughts are that the Russia-Ukraine crisis is not a big deal as it will have an impact all over the world. What matters therefore is how individual nations will handle it, and India is doing a good job already, and its economic performance is not going to be affected,
Jalan mentioned that inflation is a serious concern. Retail inflation peaked at 6.07%, eight months high in February, slightly above the RBIs comfort limit of 6%, while wholesale inflation reached 13.11% due to rising costs of production.
Questioned if India should take Union Minister Nitin Gadkari’s advice to use foreign reserves on infrastructure, the former RBI governor insisted that such kind of development must be done in rupees. “Foreign exchange reserves have to be used for doing something in foreign exchange…If there is a shortage of money, then foreign exchange reserves can also be liquified,” Jalan suggested.
India’s performance since the start of Covid 19 and even in the present face of the global financial crisis is a signal that the country is healthy enough to fight off any external factors that might want to pull it down.
