HDFC Chairman Deepak Parekh on Monday said that India too, like the rest of the world, will face some slowdown, despite remaining among the fastest growing major economies in the world.
"India is not decoupled from the world and India too will face some slowdown. But there is a consensus across the board that India will still remain among the fastest growing major economies in the world. The GDP growth for 2022 may be slightly lower than 7 percent, but that is no reason for disappointment. What is important to note is the inherent resilience that is now embedded in the Indian economy," he said.
Parekh was speaking at the World Congress of Accountants in Mumbai, hosted by the Institute of Chartered Accountants of India. This is the first time the event is being held in India.
He said the global growth, which was 6.1 percent last year is estimated to fall by nearly half to 3.2 percent in 2022 and is projected to drop further to 2.7 percent in 2023. "More than a third of the global economy will contract this year or next year, while growth in the Big 3 economies, which is US, China and the European Union is projected to fall. Global inflation is estimated at 8.8 percent for 2022 and is projected to settle down to more acceptable levels of 4.1 percent only by 2024. These are inflation highs not seen in the last 40 years," Parekh added.
Talking about India specifically, he said for many households, the key kitchen table concern is rising inflation. "They say the kitchen table is where families tend to discuss pressing issues at home. For many households globally, the key kitchen table concern remains rising inflation. Inflation is rightly described as the silent thief that eats into the hard-earned incomes of households. Rising fears of a global recession and increasing job losses, is causing further strain," he said.
Parekh added that central banks across the world have resorted to jumbo rate increases. Central banks of India, US, England, among others, have hiked interest rates in the recent past to combat the rising inflation.
He said central banks have a tough role to play ahead as they try to avoid a hard landing. India however has had no jumbo hikes, but followed calibrated increase in rates. he said, adding that India is among the very few countries that has more tailwinds than headwinds.
"In the recent period, for India, technological leaps, energy transition and geo-political shifts have created new opportunities for the country," he said.
Parekh believes that India can grow from $3.4 trillion in the present to $7.4 trillion in five years. The HDFC Chairman added that he has never been so optimistic about the country's future as he is at present.
