After the red flag raised by the International Monetary Fund and the World Bank on the looming likelihood of the global recession, State Bank of India Chairman Dinesh Khara said the recession is unlikely to be as noticeable in India as compared to other countries.
The World Bank in a post alerted the growing prospects of a global recession in 2023 with rising interest rates by central banks globally. It cautioned against prolonged financial crises on emerging markets and developing economies
“Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies,” said World Bank Group President David Malpass. “To achieve low inflation rates, currency stability and faster growth, policymakers could shift their focus from reducing consumption to boosting production. Policies should seek to generate additional investment and improve productivity and capital allocation, which are critical for growth and poverty reduction.”
India is doing quite well, according to Khara, who spoke to PTI in an interview on the sidelines of the annual conference of the International Monetary Fund and the World Bank on Friday. Expected growth is 6.8 percent, and inflation is “much under control”, he emphasized.
“Majorly, it (India) is an inward-looking economy in terms of demand because a significant component of the GDP is essentially addressed to the domestic economy. So, from that point of view, I think it (global recession) will have an impact but it won’t be as pronounced as perhaps (it will be on) other economies which are fully coupled with the globe,” he said.
“If we look at the beta factor, perhaps the Indian economy’s beta factor would be much lower as compared to some of the other larger economies that have a significant component of export,” he said.
He addressed the primary cause of inflation to be supply-side not demand-led inflation.
“If we look at the supply-side aspect of inflation, we’ve got a situation where capacity utilization is just about 71 percent. To that extent, there’s elbow room available for improving the capacity. So essentially, supply chain disruption, which has happened on account of the global headwinds, and… its impact on crude prices is one of the contributing (factors)…,” he added.
Inputs PTI