Indianomics: Is it time to worry about economic growth, experts discuss
In an interview to CNBC-TV18, Pronab Sen, former chief statistician, Sonal Varma, chief economist-India & Asia ex-Japan of Nomura Financial and Samiran Chakraborty, chief economist of Citi helps us understand whether it is time to worry about growth or not.
In a week, financial markets have shifted from worrying about faster than expected growth and rising bond yields to worrying about slower than expected growth.
The rising COVID-19 cases have caused this near schizophrenic U-turn. The rapidity of the second wave in industrial states like Maharashtra and the third wave, if you please, in Europe have led to lockdowns in most of Europe, parts of Asia and large parts of economically crucial states like Maharashtra, Punjab, Delhi and Madhya Pradesh.
So, now with cases rising for the most part of March...should we start re-looking at growth expectations? Are gross domestic product (GDP) growth expectations of 12-13 percent for next year in danger of getting revised lower?
Separately, the Reserve Bank of India (RBI) has released the household savings data which is showing some pain of rising household liabilities getting into bigger debt. Can that constrain broad-based growth going forward? Three prominent economists - Pronab Sen, former chief statistician, Sonal Varma, chief economist-India & Asia ex-Japan of Nomura Financial and Samiran Chakraborty, chief economist of Citi can help understand whether it is time to worry about growth or not.
First up, Varma said that there are downside risks to the FY22 growth estimate.
“We need to differentiate between the short-term impact versus the medium-term impact. The short-term impact based on the mobility numbers, we have created weekly business resumption index and that is now down from about 99 in late February to around 94-95. So there is about 4-5 percentage points drop from the peak,” she said.
Meanwhile, Chakraborty said that we need to assess what happens to factors such as oil prices if global growth picks up.
For entire discussion, watch accompanying video.
(Edited by : Priyanka Rathi)
First Published: Mar 25, 2021 1:43 PM IST
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