“Our good luck is that we went through the financial cycle last decade. We have invested a lot of time and effort in strengthening the bank balance sheets and looking at their risk parameters. Our memories are still fresh. We have not forgotten the lessons of the previous financial cycle, and that gives us an additional layer of protection,” said V Anantha Nageswaran, Chief Economic Advisor to the Government of India, in response to a query on the recent banking turmoil.

The RBI, and Governor have said clearly that Indian banks are safe, resilient, and stable, he said while addressing select media persons on the sidelines of the the G20 2nd Framework Working Group (FWG) meeting under the Finance Track being held in Chennai.

Impact due to war - projections

For FY24, the Economy Survey made a projection of 6.5 per cent. The RBI predicted 6.4 per cent, and the IMF said in January that it would be 6.1 per cent. The Economic Survey also said that 6.5 per cent will be the baseline, but the range is from 6 to 6.8 per cent. “This means we were signalling that the downside risk of 6.5 per cent is higher than the upside risk of 6.5 per cent. We stand by that. We don’t see any reason to revise it at this point,” he said.

The RBI’s recent monthly bulletin and the chapter on the state of the economy are consistent with what was said in the Economic Survey on the growth prospects for next year.

“If there is a big financial crisis globally, similar to what happened in 2008, which we are not predicting at the moment, then there will be huge amounts of inter-bank financing flows and risk appetite globally, as well as technology funding and start-ups, and it will have a general impact on economic growth like it had in 2008-09. But, that’s not our baseline scenario at this point. We are not talking about sectors that will be affected. Our recovery will continue. In the Economic Survey, we said post-pandemic recovery is complete, and we look ahead to normalcy returning to economic growth averaging between 6.5 per cent and 7 per cent for the rest of the decade,” he said.


Nageswaran said that data from EPFO and NREGA suggest that the rural economy is not particularly hurting. Overall, the consumption share of the GDP has been rising in the last three years. Rural demand is picking up slightly more slowly, rather than picking up at the same pace as urban demand. However, two-wheeler, tractor sales, NREGA demand, EPFO net additions do not suggest any particular distress. With the real estable beginning to improve and also beginning to see that capacity utilisation in many sectors hitting the levels, after which additional capacities may be required will generate employment demand, he said. “I see more opportunity for the recoveries to pick up pace rather than becoming slower,” he added.