Inflation, Russia-Ukraine war, China economy are major concerns
Uday Kotak, MD and CEO of Kotak Mahindra Bank
As 2022 comes to an end, veteran banker and MD and CEO of Kotak Mahindra Bank, Uday Kotak, flagged three key risks that India must prepare for as it heads into 2023.
“As we head into 2023 – three risks we must prepare for: ‘Inflation remains stickier for longer’, ‘Russia does something unpredictable’, and ‘China drives to become numero uno’,” Kotak said on microblogging site Twitter on Friday.
India’s headline inflation fell to an 11-month low of 5.9 per cent in November from 6.8 per cent in October. Since the high of 7.41 per cent in September, this was the first time CPI inflation came below the RBI’s upper band of 6 per cent.
However, CPI inflation continued to exceed the medium-term target of 4 per cent for 38 straight months as core inflation – inflation excluding food and fuel items – remained sticky, rising to 6.1 per cent. Fuel inflation too rose to 10.6 per cent from 9.9 per cent in October. RBI has pegged CPI inflation for FY23 at 6.7 per cent.
The monetary policy committee in its latest meeting earlier this month had said that sustained high inflation could destabilise inflation expectations and hurt medium-term growth. Governor Shaktikanta Das had also said that while the worst is behind us, there is no room for complacency in the fight against inflation.
The other concerns flagged by Kotak pertain to Russia’s war on Ukraine which started in February 2022, and led to a surge in commodity prices and supply chain disruptions across the global. After a strict ‘zero Covid’ policy for three years, China too is now set to reopen its borders from January and is expected to fire all growth engines to get its economy gets back on track.