India to grow at high rate without runaway inflation: CEA

Expressing confidence that this decade will be a decade of high growth for India, Chief Economic Adviser K Subramanian today said the Indian economy will grow at a "high rate" in the current financial year and economic growth will be without runaway inflation.

Subramanian also expressed hope that FY22 GDP may remain close to Economic Survey projection of 11 percent.

Interacting virtually with the construction equipment industry, CEA said, "India should grow at a high rate this year. We need to acknowledge the slew of reforms brought about by the government. Reforms will enhance productivity."

"So we will grow at a high rate this year on a low base. In FY23, the growth may moderate to 6.5 percent to 7 percent and accelerate further beyond 2022-23 as full impact of the reforms kick in," Subramanian added.

Being asked whether the country will achieve the 11% GDP growth in FY22 projected in the Economic Survey, Subramanian said "we will be in that ballpark." He also said that the growth projections made in the Budget as well as the Economic Survey were conservative estimates.

Global agencies have revised Indian growth projection downwards for the current financial year.

Subramanian maintained that economic growth will happen in India without runaway inflation. Taking cues from the Asian financial crisis, the government has opted for creating growth by working on the supply side thereby spending more on infra, and capital expenditure than the demand side approach in 2008, which created runaway inflation, he explained.

"I do not anticipate inflation to be a problem," Subramanian said.

Meanwhile, the ministry of finance is also of the view that the economy is showing signs of revival after the second wave.

In its monthly economic review for June released earlier this month,  Department of Economic Affairs (DEA) said that the Indian economy is showing signs of revival from the second wave of the Covid-19 pandemic.

On inflation, DEA pointed out that while supply side disruptions stoked retail inflation, healthy monsoon, unlock and kharif sowing are expected to bring reprieve even as global demand led recovery risks continue.

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