India can grow at 9%: Sanjeev Sanyal, Member of PM's Economic Advisory Council

The Indian economy can achieve a growth rate of nine per cent if the global environment is conducive, Sanjeev Sanyal, Member, Prime Minister's Economic Advisory Council (PM-EAC) said in an exclusive interview. “We have a good robust car, with a good engine and a good driver. Our supply side is in perhaps the best shape of any major economy in the world. Even under very difficult circumstances, we are at around 7 per cent GDP growth. Going forward, even if we get the clear road that we got between 2003 and 2006, when the international situation was conducive, then India’s economy can grow at 9 per cent,” Sanyal said.                                      

Stating that domestically driven inflation has peaked in India, Sanyal pointed out that international energy prices have been elevated in the last few months and have fed into inflation globally. India's retail inflation jumped to 7 per cent in August as against 6.71 percent in July. Inflation has been the biggest concern for the government and the RBI, and this is the eighth straight month when the numbers are above the central bank's upper range of 6 per cent.

“Clearly, as per the latest inflation numbers, it is out of India’s comfort zone. International prices are high, and every developed economy is seeing record-breaking inflation. However, India is doing well in comparison to other countries, Sanyal said in the exclusive conversation with Siddharth Zarabi, Managing Editor, Business Today TV. 

"Domestically driven inflation and core inflation have peaked in India. But, are we as a country immune to the rest of the world? We have comfortable food stocks at home, but cannot ignore geo-political concerns. Disruptions in production or blackouts will have an impact on India. Let me say, India has been part of the solution, and has been consistently supplying the world”, Sanyal added. 

Early this week, the finance ministry said the moderate increase in retail inflation was attributable both to an adverse base effect and an increase in food and fuel prices. “Despite erratic monsoons and negative seasonality in vegetable prices, food inflation is still lower than the April peak of the current year." it said. 

Commenting on food grain stocks, and the continuation of the 5-kg free food grain supplies started during the pandemic, Sanyal said, “in the long term, we want India's agricultural structure to be globally competitive. When markets break down, we need to put in some temporary measures so that Indian interests are also managed.”

“For many years, we have had food grain stocks far in excess of what has been there. Not so long ago, discussions used to be about how much wastage happens. Maybe the food grain stock has come off from the peak, but it is still adequate."

On the extension of Pradhan Mantri Garib Kalyan Anna Yojana, he said it was an emergency measure that was taken given the situation at the time of peak-Covid.  

The centre has extended this scheme for another six months till 30 September 2022. 

Commenting on global oil prices, which after reaching $120 per barrel after the Russian-Ukraine war broke out have tapered to below $100 per barrel in recent weeks, Sanyal said that as soon as normalcy returns in terms of oil prices, India will also go back to market linked retail prices of petrol and diesel.

India has received $58.8 billion in foreign direct Investment in the financial year 2021-22 in spite of headwinds in the global and domestic economic environment. Stock markets around the globe tumbled recently due to increased commodity prices, rising inflation, and domestic currency depreciation.

However, India had fared much better than many of the developed markets, which is a clear indication of India’s growth story and robust macro factors. “India has a very big value proposition. Even at the margin, we can see our own domestic manufacturers doing well, Sanyal said.

 

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