: SBI ecowrap report junks Raghuram Rajan’s low growth theory #FinanceIndia #StockMarketNEWS SBI ecowrap report junks Raghuram Rajan’s low growth theory Mumbai, Mar 7 (KNN) India’s economy

@StockMarketNEWS Mon 13 Mar, 2023

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SBI ecowrap report junks Raghuram Rajan’s low growth theory #FinanceIndia #StockMarketNEWS
SBI ecowrap report junks Raghuram Rajan’s low growth theory Mumbai, Mar 7 (KNN) India’s economy has a firm foundation and is progressive, said the State Bank of India in its economic research report Ecowrap.

The premier public sector bank has called the recent argument by former Reserve Bank of India Governor Raghuram Rajan that India’s growth rate could slip to the Hindu rate of growth of around 4 per cent as ill-conceived, biased and pre-mature.

He recently cautioned that India is “dangerously close” to the Hindu rate of growth (of 4 per cent) in view of subdued private sector investment, high interest rates and slowing global growth.

“Apart from the fact that quarterly growth numbers are noisy and should be best avoided for any serious interpretation (on an average, India’s GDP growth has witnessed Rs 2-lakh-crore upward revision for the 3-year ended FY23), we find such argument ill-conceived, biased and pre-mature at its best when weighing the recent GDP numbers against the available data on savings and investments,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

While it is now clear that potential growth of Indian economy (a global phenomenon) is now lower than earlier, Ghosh underscored that future GDP growth rates even at 7 per cent could still mean a decent number by any standards.

The report emphasised that gross capital formation (GCF) by the government touched a high of 11.8 per cent of GDP in 2021-22, up from 10.7 per cent in 2020-21.

This also had a domino effect on private sector investment that jumped from 10 per cent to 10.8 per cent over the same period.

“In fact, the trends in GCF to gross output ratio or the plough back of funds for creation of fresh capacity shows that for public administration, the ratio attained fresh peak in 2021-22 owing to the emphasis on capital expenditure in recent budgets,” Ghosh said.

At the aggregate level, gross capital formation is supposed to have crossed 32 per cent in 2022-23, the highest level since 2018-19.

The report noted that in 2021-22, gross savings have risen to 30 per cent from 29 per cent in 2020-21. The ratio is supposed to have crossed 31 per cent in 2022-23, the highest since 2018-19, it added.

The household savings increased sharply during the pandemic on account of sharp accretion in financial savings such as deposits. (KNN Bureau)