Sunday , July 14 2024
Home / Business / Economic Milestone: How Crude Oil Could Drive India’s GDP to 6.5% in 2024

Economic Milestone: How Crude Oil Could Drive India’s GDP to 6.5% in 2024

GDP Growth in FY 2024: NITI Aayog’s Perspective

In a recent interview, Arvind Virmani, a member of NITI Aayog, made some noteworthy statements regarding India’s GDP growth in the fiscal year 2023-24. Virmani discussed the impact of high crude oil prices and climate change on the Indian economy. He also commented on the global GDP fluctuations and addressed misconceptions raised by some American economists. Let’s delve into these insights and their implications for India’s economic prospects.

The Growth Forecast

Arvind Virmani projected that despite the uncertainty caused by soaring crude oil prices and climate change, India’s economy is poised to grow at a rate of approximately 6.5% in the financial year 2023-24. This optimistic outlook is a ray of hope amid concerns about external factors affecting the nation’s economic stability.

The ‘PTI Language’ Interview

In the interview, Virmani coined the term ‘PTI Language’ to describe his growth estimate for India’s GDP. He believes that the recent global GDP trends indicate a more balanced trajectory rather than erratic fluctuations. This assessment counters the claims made by some American economists.

American Economists’ Misconceptions

Arvind Virmani tactfully addressed the assertions of certain American economists who touted exaggerated figures for India’s economic growth. He pointed out that some former officials seemed unfamiliar with the methodology behind GDP calculation, likely due to their academic backgrounds.

Insights from the Finance Ministry

The Finance Ministry, too, weighed in on the criticism surrounding GDP calculations. It clarified that the ministry continues to rely on income-based estimates for economic growth, a practice consistently followed. The ministry emphasized that several international agencies have adjusted their estimates after reviewing the first quarter data.

The Current GDP Growth Rate

In the financial year 2022-23, India’s GDP growth rate stood at 7.2%, a significant drop from the 9.1% recorded in 2021-22. According to the estimates of the Reserve Bank of India, the current fiscal year may witness a 6.5% growth in India’s GDP, signaling a cautious recovery.

Concerns About Crude Oil Prices

Economists have expressed concerns about the impact of rising crude oil prices on India’s economy. Virmani highlighted how the geopolitical dynamics between Saudi Arabia and the United States have evolved over the past decade, affecting their coordination on oil-related matters.

Record-High Crude Oil Prices

International crude oil prices have crossed the $90 per barrel mark for the first time in ten months. Currently hovering around $92 per barrel, these prices have prompted Saudi Arabia and Russia to reduce oil production.

Savings on the Decline

Virmani’s observations also shed light on the resurgence of El Niño and the increased uncertainty brought about by climate change. While total savings have been on the rise, pure household savings are declining due to the rapid expansion of consumer credit.

In conclusion, Arvind Virmani’s insights offer a valuable perspective on India’s GDP growth prospects for FY 2023-24. Despite challenges posed by fluctuating crude oil prices and climate change, the nation appears poised for a robust economic performance. However, it is essential to monitor these factors closely as they continue to exert influence on India’s economic trajectory.