India unlikely to be hit as hard by global recession as other countries: SBI chairman

Washington, October 15

The impact of a global recession, which is increasingly being feared by the International Monetary Fund and the World Bank, is unlikely to be as pronounced in India as compared to other countries, State Bank of India Chairman Dinesh Khara said.

With a projected growth rate of 6.8 per cent and inflation “much under control”, India is doing reasonably well, Khara told PTI in an interview on the sidelines of the annual meeting of the International Monetary Fund and the World Bank here on Friday.

“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.