India’s macroeconomy to grow faster and healthier: Ashima Goyal

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Eminent economist Ashima Goyal said that India’s macro economy is all set to grow faster and become more healthier, despite the severe shock from the pandemic, Business Standard reported on Sunday. Adding to that, the faster than expected recovery from the first and second waves points towards the economy’s inherent strength, she observed. In the interview, she further added that certain sectors are already showing signs of a rise in private investment.

However, Goyal said that private infrastructure investment boom of the 2000s cannot be expected, though many Indian startups are doing well. She is also a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI).

The RBI has lowered the country’s projection for the current financial year to 9.5% from 10.5% in an earlier estimate. On the other hand, the world bank has projected India’s economy to grow at 8.3% in 2021.

Stock markets performing well despite economic slowdown

Due to the quantitative easing of central banks of various countries, portfolio inflows into India are on the rise. She also opined that they are also attracted by the country’s growth prospects. More durable Foreign Direct Investments (FDIs) and government’s investment in infrastructure has a larger share in the recent capital inflows, she adds.

While ensuring interest rates are aligned to the domestic policy cycle, India has enough resources to ride out any volatility, she said.

At a time when the economic growth has slowed down, stock markets gave been performing well. On that front, Goyal said that stock markets have been forward looking and they do move ahead of the real economy normally. She also added that a wider Indian public has started participating in stock markets giving them a diversified portfolio. Also, having different investor-types makes markets more stable and reduces volatility, she said.

Further, lower interest rates also increases the present discounted value of future earnings and reduces the attractiveness of fixed deposits, she said. Adding to that gradual rise in policy interest rates need not necessarily lead to a major correction, if the rise accompanies a growth recovery, which is positive for markets and long term prospects remain good.