The war between Russia and Ukraine has wreaked havoc on the global economy. On February 24, Russia launched a military operation against Ukraine. Following the attack, Western countries, especially the United States, slapped severe economic and other penalties on Russia. The development in Ukraine has become a matter of concern.
Yet, the Former RBI Governor Bimal Jalan feels assured that the India’s economic performance is too sturdy to get affected.
While noting that the situation in Ukraine is concerning, Jalan stated that it will have no impact on India’s economic performance. On February 24, Russia launched a military operation against Ukraine. Following the attack, Western countries, especially the United States, slapped severe economic and other penalties on Russia.
Jalan believes that India’s present macroeconomic status is favourable, as evidenced by its strong growth rate. India has a sizable foreign exchange stockpile.
India, Asia’s third-largest economy, is anticipated to grow 8.9% in 2021-22, according to the latest government data. For 2022-23, the Reserve Bank of India (RBI) forecasts 7.8% GDP growth.
In February, retail inflation reached an eight-month high of 6.07 percent, maintaining beyond the RBI’s tolerance zone for the second month in a row, while wholesale price-based inflation jumped to 13.11 percent as crude oil and non-food item prices continued to rise. To maintain fuel costs within an acceptable range, the government has already reduced several taxes on gasoline and diesel.
Yet, the country’s high unemployment rate is a cause for concern for the previous RBI governor.
While Union Minister Nitin Gadkari suggested that India use its foreign reserves to fund infrastructure projects. When asked about the topic, Jalan stated that it must be done in rupees.
Jalan stressed that the Foreign exchange reserves must be utilized for foreign exchange transactions…if money is in limited supply, foreign exchange reserves can be liquefied.
