Chief Economic Advisor V Anantha Nageswaran on November 8 said India has no reason to panic in the coming months, especially in view of the outcome of the US elections and the related “hyperventilation about oncoming trade battles”.

“External trade growth in any case is subject to vagaries of global growth more than it is subject to vagaries of restrictive trade policies elsewhere,” Nageswaran said, adding that global growth is steeped in uncertainty, and the policy stance and decisions that may be adopted by the incoming administration in US may open newer doors for India.

“We (India) should do our homework at several levels and be prepared. But preemptive pessimism is premature and unwarranted,” Nageswaran added.

Speaking at the Business Standard BFSI Insight Summit, Nageswaran was sharing his personal view on the evolving global economic landscape and its implications for India, particularly in light of the recently-concluded US elections.

Donald Trump’s comeback to the White House have many worried about the impact of his policies on India’s trade given his comments in the run-up to the elections terming the South Asian nation as a “tariff abuser”.

But, according to Nageswaran, political parties in advanced economies had long ago abandoned their commitment to free trade, “and climate policies have already become extension of trade protectionism”.

On the impact of a re-energised US dollar on the Indian currency due to the red sweep in the US and concerns around more foreign investment outflows from India, Nageswaran said: “Whatever is happening in the financial sector it is too early to attribute it entirely to American election result. Some of these trends were already in motion before the results.”

He cautioned against overinterpreting the first few days of the market’s reaction to the US election outcome. “Whether it is respect to the currency or FDI, I do not see any reason to be overly concerned in view of what has happened in the Indian markets even before US election results,” Nageswaran added.

Domestic growth

On India’s economy, Nageswaran said that concerns about a slight slowdown in India’s domestic growth was speculative at this stage.

“This growth slowdown by many has been attributed to election and monsoon calendar, slower public capex pace, but no one knows yet whether it is temporary or slightly longer than that. Wherever it is possible to reverse or change course upon achievement of pursued objectives, that should be done,” he said.

While, expressing comfort with his GDP growth projection of 6.5-7 percent for the current financial year, Nageswaran did not rule out the possibility of it being higher, rather closer to the central bank’s projection.

For 2024-25, the Reserve Bank of India’s projection is less conservative than the government’s at 7.2 percent.