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    India's dependence on global economy relatively less than its peers: Siddharth Sanyal

    Synopsis

    ​​The positive side in a very convoluted way though might be that community prices might cool off a bit because of this particular factor and on balance India might actually enjoy one more buffer from the commodity price angle but at the same time not without a lot of complications because of the weaker production momentum from China and weaker global recovery.

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    At the same time the source of cheap manufacturing will also be relatively restricted that is why that particular zone will be taken up by some of the other countries. But cost of manufacturing there might be slightly higher.
    "I think one particular factor remains very critical going ahead in the near term over the course of the next possible three months is the rise in cases of COVID in certain parts of the globe particularly China. I think how exactly that plays out will have a lot of bearing on the region including India," says Siddharth Sanyal, Chief Economist, Bandhan Bank.

    What is your reading from the RBI Bulletin especially on what kind of a year we are looking at? What stood out for me is a reiteration of the belief that inflation has peaked?
    That is correct and this has been our anticipation also for a while and from a broader macro point of view also that is not too surprising. If you see over the course of the last several months the momentum in global growth and prospects of momentum going ahead in 2023 seems to be tapering down a bit. Also the rate hikes in a large number of countries including the US and some of the other major countries have been phenomenal and almost unprecedented. We have not seen these kind of hikes in the recent past. So overall that will likely have some kind of a dampening effect on the overall growth recovery but the positive side is that it will possibly help us gain better control on inflation.

    Where do you see positioning of India relative to the world going forward? Will it still be played by inflation? We are seeing capex not at the best possible situation but the overall narrative seems to continue that India is relatively better off.
    I do completely agree with that and to appreciate that particular view we possibly would have to take a step back and see the broader fundamentals or the characteristics of the economy. If you try to see that you will find that India's linkage or dependence on the global economy is relatively less compared to some of its peers. Number two, the domestic economy is pretty large and there are multiple drivers not one driver. It is not consumption only, it is not investment only, it is not export only it is rather some kind of a balanced economy. Less dependence on global economy possibly gives India some kind of a buffer that is not really present today with a lot of countries.

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    Also I think one particular factor remains very critical going ahead in the near term over the course of the next possible three months is the rise in cases of COVID in certain parts of the globe particularly China. I think how exactly that plays out will have a lot of bearing on the region including India.

    Tell me a bit more about the China factor. If China reverts to restrictions as a means to deal with the surge in infections that is bad news, the infections growing in themselves is bad news. So do you think that this is going to be a pain point at least for the next three to four months?
    It can potentially be. If I again take a step back and look at what exactly China means to the global economy then we will see that it consumes a lot of raw material but at the same time it produces at a scale and produces at a cheap cost. So if China slows down over the course of the next two, three-four months that means the momentum of recovery in the global economy will be significantly impaired in the near term. At the same time the source of cheap manufacturing will also be relatively restricted that is why that particular zone will be taken up by some of the other countries. But cost of manufacturing there might be slightly higher.

    The positive side in a very convoluted way though might be that community prices might cool off a bit because of this particular factor and on balance India might actually enjoy one more buffer from the commodity price angle but at the same time not without a lot of complications because of the weaker production momentum from China and weaker global recovery.

    (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)




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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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