India not detached from the world; will face a slowdown: Deepak Parekh

Despite remaining among the fastest growing major economies, India will face some slowdown as it is not decoupled from the world, HDFC Ltd Chairman Deepak Parekh said on Monday.

He believes that the country can grow from a $3.4 trillion economy to a $7.5 trillion economy in the next 5 years.

“India is not cut off from the world and India will also face a slowdown. But there is a general consensus that India will continue to be among the fastest growing major economies in the world,” Parekh said, while addressing the World Congress of Accountants.

Many countries are facing recession fears as central banks around the world are tightening their monetary policies to control high inflation.

India’s GDP growth by 2022 may be slightly below 7 percent, but that is no cause for disappointment, Parekh said, adding that “what is important to note is the inherent resilience that is now built into the economy.” India”.

He said that amid an uncertain global context, India is currently among the few countries in the world that have more tailwinds than headwinds.

“India is a conspicuous exception to stagnant global growth,” he said.

According to a recent research report, by 2031, the country’s per capita income is expected to rise from $2,300 today to $5,200, the share of services in GDP is expected to rise from 55% to 64%, and the stock market national could be the third largest. with a market capitalization of $10 trillion, he said.

The number of households earning $35.00 per year would increase fivefold from the current 5 million to 25 million by 2031, he added.

Speaking about global monetary tightening, Parekh said that for central banks around the world, price stability is critical, which is why there are a number of rate hikes. Monetary policy actions are likely to continue to follow the ‘higher longer’ mantra.

“This means prolonged high inflation coupled with aggressive interest rate hikes by most central banks in their effort to tighten the money supply and restore price stability,” he said.

Parekh said the dilemma for central banks is determining the delicate balance between raising interest rates early to curb inflation and ensuring that such actions do not end up stifling economic growth.

“If central banks stop raising rates too soon, they risk inflation rising further. If they go overboard on rate hikes, it could stall economic growth,” he said, adding that central banks have a difficult role ahead of them as they try to avoid a hard landing.

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