“Majorly, it (India) is an inward-looking economy in terms of demand because a significant component of the GDP is essentially addressed to the domestic economy. So, from that point of view, I think it (global recession) will have an impact but it won’t be as pronounced as perhaps (it will be on) other economies which are fully coupled with the globe,” he said.
“If we look at the beta factor, perhaps the Indian economy’s beta factor would be much lower as compared to some of the other larger economies that have a significant component of export,” he said.
Considering the current situation of the global economy, Khara said, India is doing reasonably well given its projected growth rate of 6.8 per cent and inflation “much under control” despite the global headwinds.
The primary cause of inflation is not demand-led. It is essentially supply-side inflation, he said.
“If we really look at the supply-side aspect of inflation, we’ve got a situation where capacity utilisation is just about 71 per cent. To that extent, there’s elbow room available for improving the capacity. So essentially, supply chain disruption, which has happened on account of the global headwinds, and… its impact on crude prices is one of the contributing (factors)…,” he added.
Overall, all economies across the globe are going through a rough patch, Khara said, adding that the government is focused on dealing with these factors.
India’s growth prospects are expected to improve going forward, he said.
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