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By Anup Roy
India needs to build greater resilience in critical industries to protect its economy from an increasingly uncertain global environment, a senior official said Thursday, pointing to semiconductors as one area where New Delhi is seeking to reduce its vulnerability to external shocks.
“Today as nations navigate uncertainty and confront critical trade-offs, India has emerged as a stable economy that has the ability to withstand external headwinds,” Economic Affairs Secretary Anuradha Thakur said at the State Bank of India Banking and Economics conclave. “It has become all the more important for us to develop strategic resilience in this backdrop.”
Thakur added that the government is already taking “proactive steps to build capacity in emerging and strategic sectors across the economy,” pointing to India’s efforts to develop a domestic semiconductor industry as one example.
Thakur’s comments come a day after a host of international agencies turned more upbeat on India’s economy.
The Organisation for Economic Co-operation and Development, Asian Development Bank, S&P Global and Fitch Ratings lifted their growth forecasts for the financial year-ending March by 40 to 80 basis points, citing solid domestic demand and investment, and a smaller-than-feared hit from the West Asia conflict and higher energy prices.
Last week, Moody’s Corp. raised its forecast for the fiscal year to 7 per cent from 6 per cent previously. India’s gross domestic product grew 7.8 per cent in the three months ended June from a year earlier, and momentum is expected to carry into the current period, helped by festive-season demand.
“All in all, the Indian economy has done exceptionally well, notwithstanding the multiple shocks it has faced,” Reserve Bank of India Deputy Governor Poonam Gupta said at the same venue Wednesday.
Economists expect the RBI to also raise its 6.7 per cent growth forecast for the fiscal year when policymakers meet early next month. A majority also predict the first interest-rate hike since early 2023 as inflationary pressures show signs of broadening. A quarter point rate increase by the US Federal Reserve earlier this month has also added to the challenges facing the RBI.
The RBI has kept its benchmark repurchase rate unchanged at 5.25 per cent this year so far.
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