The Lieutenant Governor was speaking at a conference on ‘Growth and Growth in BRICS Economies’ organized by the Delhi School of Economics and the Indian Statistical Institute.
Reserve Bank Deputy Governor Michael Debabrata Patra on Monday said India is better positioned to face external shocks arising out of rising geopolitical tensions, the aftermath of the COVID pandemic and the inevitability of climate change.
With regard to the macroeconomic configuration in 2013, when India was described as one of the fragile five countries, he said, “India is currently in a better position, as its macroeconomic fundamentals have improved significantly, and the external sector The indicators point to the availability of adequate cushion for external management of shocks”.
He was speaking at a conference on ‘Growth and Growth in BRICS Economies’ organized by Delhi School of Economics (DSE) and Indian Statistical Institute (ISI).
India will have to use its macroeconomic strength to neutralize external sector threats, he said.
“I present this strength (macroeconomic fundamentals) as a challenge as the international environment is becoming hostile with geopolitical tensions, the long-lasting scars of COVID and the inevitability of climate change.
“Furthermore, countries across the world are considering shifting their policy stance away from a pandemic mode to a normalcy. This will involve global spillovers from which India may not be immune. Hence the feasibility of the external sector is critical, ” They said.
The Deputy Governor further said that India is currently one of the fastest growing major economies of the world. India is the third largest economy in the world in terms of purchasing power parity (PPP).
“Projections suggest that by 2040, India will be the second largest economy in the world. I think this is the ultimate challenge – preparing to become a global economic superpower with BRICS,” he said.
GDP growth is widely used as an indicator of a country’s economic progress.
If one looks back over the past 75 years, the Bai-Perron structural breakpoint tests show that India’s growth trajectory has passed through three phases, Mr. Patra said.
By the late 1970s, India had an average trend of GDP growth of 3.5% – the so-called Hindu growth rate – which has been linked to inward-looking policies adopted in that period.
Trend growth increased to 5.5% during 1980-2002 in the form of liberalization and openness. Thereafter, in the period 2003–20, until the pandemic struck, GDP growth averaged closer to 7%. In 2020-21, GDP declined by 7.3%, one of the deepest worldwide contractions that year.
“What are the growth drivers in India? It turns out that India’s growth is led by households – private consumption expenditure – however, its share in GDP has declined from 75% in the 1960s to around 55% in recent years.” has occurred.
“There have been phases of export-led and investment-led growth that cannot be sustained, but they have provided turning points in the growth path,” he said.
The summit is timely and timely in view of India taking over the presidency of BRICS in 2021.
Shri Patra said that since BRICS came into existence in 2009-10, important milestones in their journey have been passed simultaneously. These include the New Development Bank (NDB), the Contingency Reserve Arrangement or CRA, the BRICS Strategic Economic Partnership 2021-2025, and the BRICS Payments Task Force (BPTF).
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