“In uncertain external environment and despite exports not doing as well as last year, domestic demand will drive GDP growth… Domestic inflation is expected to ease further on softening commodity prices and expectation of a good rabi crop,” chief economic adviser V Anantha Nageswaran told reporters after the September quarter numbers were released.
He identified tightening of financial conditions in the US as a potential risk to the Indian economy.
Earlier in the day, finance minister Nirmala Sitharaman said that India can look forward to “a very good … growing Indian economy this year and the next”, while promising to retain the focus on capital expenditure.
“We would continue to push capital expenditure, and that I’m saying even as I’m preparing for the next Budget,” Sitharaman told the conference, according to a Reuters report. Capital expenditure, she said, “can guarantee good growth”.
Nageswaran said high government spending on creating assets is expected to help boost private capex, with early signs visible as companies have begun ramping up capacity.
While Nageswaran said the growth rate was expected to moderate towards the trend rate of growth, he countered domestic and international agencies, which are predicting a sharp slowdown next year. He argued their models did not factor in cleaning up of balance sheets of banks and the corporate sector as well as massive digital public service delivery capability that the government had built using bank accounts, mobiles and Aadhaar.