Enhanced capital formation will lead to high growth. Recently, the IMF had projected the real growth for this year at 6.8 per cent and 6.1 per cent for the upcoming year for India. There may be a 0.5 to 0.8 per cent addition to the 6 per cent baseline numbers
The chief economic adviser (CEA) of India, V Anantha Nageswaran is hopeful about India clocking better economic growth than what the International Monetary Fund had projected for the next fiscal.
He said that enhanced capital formation will lead to high growth. Recently, the IMF had projected the real growth for this year at 6.8 per cent and 6.1 per cent for the upcoming year for India.
Nageswaran said that the growth rates in the upcoming years may slightly be on higher side. They will be better than what these numbers are, as there exists a possibility of India’s capital formation cycle perming better post one decade of retrenchment.
Expectedly, India’s public digital infrastructure has crossed an inflection point. Also, It will contribute to the formalisation of the economy leading to higher growth, he said.
In his opinion there may be a 0.5 to 0.8 per cent addition to the 6 per cent baseline numbers. Also, he said that normally the fiscal policy and monetary policy are synchronised and counterbalance each other.
Commenting on high debt-to-GDP ratio, he said that sustainability is not focus a concern and it may go down with asset monetisation. By using asset monetisation proceeds, India can bring down its debt which will help in improving the credit rating. According to him, it can be the best fiscal stimulus that India can provide.