While expressing apprehensions regarding the financial markets volatility in the wake of developments in Europe, Dr. Mahesh Gupta, President, PHD Chamber of Commerce and Industry said that volatility in financial and currency markets is short lived as Indian economy is resilient and sustainable on account of its strong macroeconomic fundamentals and well supported dynamic policy reforms.
I believe India’s economy has strengthened on account of strong policy measures undertaken by the government in the recent times which will aid in mitigating the negative impact of any international developments, said Dr. Gupta.
India is not only the fastest moving economy but its economic share in the world GDP is also increasing at a significant pace from 2.62% in the year 2010 to 2.98% in the year 2015, said Dr. Mahesh Gupta.
India recorded a higher growth of 7.6% in 2015-16 as compared to 7.3% in 2014-15, 6.9% in 2013-14 and 5.1% in 2012-13, despite the slowdown witnessed in the world economy, growth in India remained robust, buoyed by strong investor sentiment and the positive effect on real incomes of the recent fall in international commodity prices, added Dr. Gupta.
India’s economic resilience has strengthened during the recent times on account of factors such as improving FDI inflows, current account deficit and forex reserves, declining trade balance due to fall in commodity prices and several measures undertaken to boost up investment sentiments in the economy.
India attracted FDI equity inflows at about USD 40 billion during 2015-16 as against USD 30.9 billion during the corresponding period of last year, posting a robust growth of about 29%.
The Current Account Deficit (CAD) narrowed to 1.1% of GDP in 2015-16 from 1.3% in 2014-15 is more or less manageable at this juncture.
Forex reserves at about USD 360 billion as on 27th May 2016 as against around USD 352 billion as on 29th May 2015 have been improved significantly.
Trade balance has also declined to around (-) USD 11.1 billion during Apr-May 2016 as compared to (-) USD 21.4 billion for Apr-May 2015. Though, exports growth is needed to be revamped with supportive export infrastructure in general and reducing transportation costs in particular to revive the sluggish export growth trajectory, he added.
FII investments represent a gloomy picture. It stands at an average of about (-) USD 836 million in 2015-16 as against USD 3808 million in 2014-15, representing a growth of around (-) 122%.
We appreciate the macro-economic stability with a significant decline in inflation that has come about in the last two years . At present, WPI inflation stands at 0.79% in May 2016 and CPI inflation at 5.7% in May 2016.
Going ahead, under the patronage of dynamic and fast moving reforms covering all pillars of development, India’s economic resilience will be strengthened to mitigate the impacts of international developments, said Dr. Gupta.