Indian economy poised for recovery, but high crude prices worrisome: Chief Economic Adviser

‘Banking sector is stable, capital is available and credit offtake is poised to take off’

Chief Economic Adviser (CEA) V. Anantha Nageswaran on Thursday said that the Indian economy was poised for recovery but high crude oil price was a cause for concern.

The banking sector in the country is stable, capital is available and credit offtake is poised to take off, he said at a webinar organised by Bharat Chamber of Commerce.

"We are not unique to the phenomenon of uncertain growth and high inflation due to the pandemic. Developed countries are also facing the same problem," he said.

The Budget for 2022-23 had been made keeping in mind that the price of crude oil would be about $75 per barrel, he said. But due to the conflict between Russia and Ukraine, the price of Texas crude is now $96 per barrel. "Its impact on the Indian economy will depend how long this high price will remain," Mr. Nageswaran said.

Inflation and purchasing power is a worldwide problem, according to him. This has been due to a rise in shipping costs, high container costs and high oil prices.

In India, inflation rates are hovering at about 5.2% at the moment. "But, I feel it should remain within 4-6% in the next fiscal which the RBI is targeting," he said.

The CEA said the market had begun to correct in India. "Activity levels in some industries have crossed the pre-pandemic levels. But the services sector is yet to recover".