FY23 GDP forecasts by various agencies realistic: CEA Anantha Nageswaran

Range between RBI's 7.2% and IMF's 8.2% a reasonable prediction, says CEA

Chief Economic Advisor V Anantha Nageswaran said on Wednesday that the range given by various agencies for India’s FY23 real gross domestic product growth – from Reserve Bank of India’s (RBI’s) 7.2 per cent to the International Monetary Fund’s (IMF’s) 8.2 per cent — was a realistic one.

Speaking at an event organised by the Centre for Social and Economic Progress (CSEP), Nageswaran had also said volatile oil prices due to Russia’s invasion of Ukraine had made it difficult to predict what the Centre’s subsidy burden at the end of the year will be.

“This range, between the RBI’s 7.2 and the IMF’s 8.2, is a realistic one, and at this moment seems like a reasonable prediction,” Nageswaran said.

Last month, the IMF, in its April World Economic Outlook report slashed its forecast for India’s FY23 GDP growth to 8.2 per cent from 9 per cent, saying that higher commodity prices will weigh on private consumption and investment. Even then, it is still a more bullish outlook compared to other agencies, including the RBI, which cut its forecast to 7.2 per cent from 7.8 per cent.

In an interview with Business Standard just before that, Nageswaran had warned that inflation will definitely impact the Indian economy and that he considers the RBI’s estimate of 7.2 per cent as the “floor” for this year. The CEA, however, added that the buffers built into the Budget should hold in spite of higher spending and that India’s debt profile was sustainable.

As reported earlier, the Centre’s fertilizer subsidy outlay for the year could be as high as Rs 2.1-2.3 trillion on back of sustained high commodity and oil prices due to the war in Europe. This will be the highest ever spending on fertilizer subsidy in a year by a considerable margin and compares with FY23 budget estimate of Rs 1.05 trillion.

Additionally, the Modi government’s decision to extend the PM Garib Kalyan Anna Yojana (PMGKAY) till September will increase the food subsidy outlay for FY23 to Rs 2.87 trillion from budget estimate of Rs 2.07 trillion. All this while officials maintain there will be no compromise on the centre’s Rs 7.5 trillion capital expenditure plan.

Nageswaran said the current geopolitical realities make the jobs of policymakers very difficult. “In this ever-changing scenario, policymakers will have to work with imperfect, incomplete and inadequate set of forecasts,” he said.