India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing, the EAC-PM member observed.

“We are clearly entering an environment where many countries around the world will be facing much slower growth or even slipping into recession,” he said, adding, “This is due to a combination of factors ranging from tighter monetary policy to higher energy costs, as well as disruptions caused by the Ukraine war.”

Earlier on 6 October, the World Bank projected 6.5 per cent growth rate for the Indian economy for 2022-23, a drop of one percentage point from its June 2022 projections, citing deteriorating international environment.

ALSO READ: World Bank cuts India growth estimate by 1 percentage point

“Under those circumstances, India’s performance will stand out as being perhaps the strongest of any major economy in the world with around 7 per cent GDP growth rate in current fiscal year nonetheless,” Sanyal said.

According to Sanyal, the cumulative impact of supply side reforms over many years by the Modi government has meant that India’s economy is currently much more flexible and resilient than it used to be.

Noting if India gets an external environment like the one it had during 2002-03 to 2006-07, Sanyal said that India’s economy is capable of delivering 9 per cent growth.

“But obviously, we are not in that environment right now. So given that situation 7 per cent GDP growth rate is a good performance,” he said.

However, he cautioned against pushing growth unnecessarily “when the highway has so many bumps and hurdles in the way”.

Recently, the Reserve Bank of India slashed the growth projection to 7 per cent for current fiscal year from the earlier forecast of 7.2 per cent, citing aggressive tightening of monetary policies globally and moderation in demand.

On the Indian rupee touching a historic low last week, Sanyal said,”I don’t think we should get too fussed about looking at just the dollar INR exchange rate.”

Sanyal noted that there is obviously a very sharp strengthening of the US dollar against all currencies and in that circumstance, but the rupee actually is appreciating against all currencies except dollar.

“The central bank should not defend a particular level, it should however, use its reserves to control volatility,” he commented on RBI’s decision on allowing the rupee to find its level while at the same time using the reserves to smoothen the volatility. The rupee hit a historic low of 82.33 to a dollar on Friday.

With PTI inputs.