FM Sitharaman on India's GDP growth: 'Very uncertain time, difficult to project number'

Finance Minister Nirmala Sitharaman on Monday said it was very difficult to predict the growth rate in the medium to long term due to uncertainties in the world. She said this was because two problems - the Ukraine war and Covid - were still not coming to an end. 

"Every finance minister must have faced challenges, but now at least two major problems yet not completely coming to closure - pandemic, in some parts it is still alive; and the war, which doesn't seem to show any sign of coming to conclusion," she said while speaking at BT Budget Roundtable in Delhi.

"It is very difficult for me to take a risk and say this number I will be comfortable because I do not know what risks again I'll have to (encounter)," she said.

The finance minister said in the last three years, it was noticed that within a month after the budget presentation "something else would come and challenge us".

"Whether it was a Delta wave, whether it was Omicron, or Russia war - very uncertain time, it is difficult to project number," Sitharaman said when asked about the GDP growth number by Business Today TV's Managing Editor Siddharth Zarabi.

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The ongoing war in Ukraine and the central banks' move to hike interest rates to tame persistent high inflation have slowed down economic growth globally. A number of countries are likely to slip into recession, according to World Bank and IMF. However, India is likely to record 6-plus per cent growth, which will make it the fastest-growing large economy in the world.

In the recent Economic Survey, India is projected to grow at 6 to 6.8 per cent in 2023-24, depending on the trajectory of economic and political developments globally.

Recently, Chief Economic Advisor V Anantha Nageswaran said India was likely to grow at 6.5 per cent this fiscal year. When asked whether he had given up on the hope of achieving 8 per cent growth, he said this was possible but one should not look at this figure at this point.

"No, we have not given up hope on 8 per cent growth. Even without export growth kicking in we can strive for and be able to achieve 8 per cent growth if on top of what already has been done several other additional dimensions are addressed as well," he said.

The CEA, however, said that the reason the country should not be looking at 8 and 9 per cent at this point is the difference between the first decade and now. "In the first decade, the global economy was booming and now it is not," he said.

"And in the second decade as well in spite of the unconditional monetary easing in the developed world, economic growth was not to the extent they would have anticipated. And that is one of the reasons why export performance in the second decade was as good as in the first decade," Nageswaran added.

The CEA said the government was prudent in being not assuming exports would be such a big contributor to the growth as it was in the first decade. "If it does turn out to be wrong and the global economy does better, and given India's services growth and the manufacturing capacities being created and efforts to plug ourselves in the global supply chain succeeds and if export growth also kicks in - that will definitely see our potential growth rise from 7 per cent towards 8 per cent," he said.