In India Today Conclave in Mumbai, three of the country’s main economists, notably Tanvee Gupta Jain of UBS, Sajid Z Chinoy of JP Morgan, and Samiran Chakraborty of Citibank sounded a prudent note on the country’s growth prospects in the middle of the rise of American prices and a delaying global order of trade.
Tanvee Gupta Jain, chief economist of India in UBS, underlined the impact of steep penalties on India exports. “A 50% penalty, which includes 25% reciprocal rate and 25% penalty for the purchase of military equipment from Russia, is one of the highest in emerging markets,” she said.
According to Jain, nearly $ 35 billion in Indian products are exposed, equal to around 0.8% of GDP. The pain is the most acute in the low-margin and highly intensity sectors such as gems and jewelry, textiles, leather and shoes, which employ more than 10 million workers.
“We see a drag on GDP growth due to these higher prices.
Sajid Z Chinoy, Managing Director and Chief Economist of India, JP Morgan, warned against reprisal measures. “From a narrow economic point of view, a very simple response, no. We have much more to lose reprisals and climbing,” he said. He highlighted the importance of exports of services, which represent 7% of GDP, against only 1% of exports of goods to the United States.
“It is the epicenter of urban consumption, jobs in white collar and housing. We must negotiate in good faith and, in the short term, provide a bridge to keep businesses alive. As we did during the fine with financial support and targeted credit,” he added.
Samiran Chakraborty, chief economist of Citibank India, echoed the urgency of a rapid political action, but urged a wider rethink. “It is important that we stop this as quickly as possible, but we must also recognize that the world becomes more protectionist. We can no longer build our future growth story only on exports,” he said.
Chakraborty suggested that India uses the current crisis to push long -term reforms such as the rationalization of GST and to create a new history of growth that attracts world capital.
Overall, the panel has agreed that the history of India’s domestic demand provides resilience, but maintaining growth in a world of reverse globalization requires daring reforms. As Jain said, “the consumption stimulus is not durable. For medium -term growth of 6 to 6.5%, structural reforms are the only story that the government can swing. ”
