The road ahead to Viksit Bharat

The entry and exit of capital are two sides of the same coin, and both need to be facilitated while maintaining financial stability

- ATANU CHAKRABORTY

I called last year a year of “Predictable Unpredictabilities". I guess, this seems to be a prolonged bout. The pandemic has receded. However, globally inflation seems to be sticky, while the pundits, conditioned by an easy flow of funds since the global financial crisis, had called its early phases transitory. This has affected global demand and jobs worldwide. Interest rates are high and protectionism is rearing its ugly head. Funds for startups are inadequate, as these are all headed to the treasuries in the US.

Geostrategic uncertainties along the fault lines in Europe, West Asia, and the South China Sea are threatening to spread. On the domestic front, while the recent parliamentary elections yielded a surprise verdict, the swift formation of a government has dispelled instability concerns. Looking at the economy, India has been a bright spot with four consecutive years of 7 per cent plus growth rate. Quick action by the Reserve Bank of India (RBI) has brought core inflation towards the lower end of the band; however, food inflation is seemingly threatening. India has contributed almost 18 per cent to global growth.

The financial sector is healthy and resilient and digital transactions are surging. The Bengaluru-Chennai belt is seeing the growth of a truly sustainable startup ecosystem capable of giving rise to global scale startups across many sectors in the country. However, there are certain worrying signs that we must remain cognizant of Household savings have fallen to a low of 5.1 per cent of gross domestic product (GDP). This could impact credit, slowing growth. Consumption, the mainstay of our growth story, seems to be slowing too, though impact is currently limited and masked by a large government investment in infrastructure.