Sensex falls, Centre fields Arvind Subramanian to give a pep talk

 

“The Indian economy is still expected to grow around eight per cent in the current fiscal year...,” he said. Global investors, however, continued to be risk averse and are trimming their equity holdings amidst fear about an interest rate hike by the US Federal Reserve and concern regarding China slowdown. 

 

After opening the day on a positive note, the market failed to maintain winning momentum with the Sensex slipping 242.88 points or 0.95 per cent to end the trading session at 25,453.

 

The Nifty ended the day at 7,717, down 68.85 points or 0.88 per cent. Less than expected growth in the first quarter at 7 per cent had raised concerns whether India will be able to achieve 8-8.5 per cent  this fiscal.

 

“Overall, economic growth is moving in the right direction, although its pace is still below what the economy needs... But at a pace that is expected to pick up in response to the ongoing reforms,” he said. “And one real challenge that looms ahead appears not to be the price inflation but the possible price deflation,” said the chief economic advisor.

 

On the first quarter GDP number, he said that the numbers suggest that the “economy is recovering” and is consistent with the other more high-frequency indicators such as revenue collection and real credit growth.

 

He said that one has to look at the GDP numbers in “totality” to assess developments in the economy. “Despite decline in nominal GDP, the indirect tax collection has grown substantially,” he added.