Page 5 - CII Artha Magazine

Message From Director General

Chandrajit Banerjee, Director General, CII

T he global economic environment last monetary policy meeting on 7th prices harden, global interest rates scale
has deteriorated with the
December. It hiked repo rate by 35 bps,
up and the dollar continues to soar,
combined impact of monetary policy a break from the 50 bps rate hikes it then there would be a pressure on
tightening across the world and the went for three times since May 2022. India’s current account, and a cause
persisting war in Europe, both This coincides with a smaller rate hike to worry.
heightening the risk of recession. by the US Fed earlier this month.
However, it goes without a reasonable However, we remain confident that all
doubt that the Indian economy is doing The financial system is facing increased things considered, the likelihood is that
better than the rest of the world. pressures from the actions of the US India will maintain a moderately upbeat
Federal Reserve. With a flight to safety, economic performance, going forward.
The current growth momentum in the the US dollar has strengthened rapidly Yet, we must be cautious and watchful
economy remains strong. The latest data to a two-decade high. Consequently, like about the unfolding situation. In a
on several high frequency indicators the currencies of the other emerging nutshell, while there is a case for
confirms this. The latest core sector market economies, the Indian rupee is optimism, it should be overlaid
output, impressive GST collections, facing depreciation pressures, sliding to with vigilance.
capex spending by government, a historic low of 83.20/$ in October,
double-digit rise in credit offtake and a before recouping to around 81-82 range
well-capitalized financial sector are as per the recent data.
discernable tailwinds.
While a weaker rupee poses risk of
However, while India may be among the imported inflation, it can also support
better performing economies in the India’s exports as our goods & services
world, being intrinsically linked with the become cheaper for foreign importers.
global system, the evolving international That said, a slowdown in external
developments would leave an imprint on demand is expected to exert an
the Indian economy. A sharp downtrend opposing and bigger drag on our
in exports is already visible reflecting a exports.
slowdown in global trade.
Encouragingly, the persistently high CPI Going forward there would be ample
inflation has now moved within RBI’s global uncertainties and challenges
target band of 2-6% on easing food which India would have to reckon with
inflation. In consonance, WPI inflation and navigate. The chief imponderable
has also now moderated sharply. In the among them is the likely trajectory of
wake of risks to growth, RBI moderated the Russia-Ukraine war and where it is Chandrajit Banerjee
its pace of monetary tightening at the headed. If the war escalates, commodity Director General, CII

ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 05
QUARTERLY JOURNAL OF ECONOMICS
DECEMBER 2022