Decent growth expected in FY23: MPC member

New Delhi, Dec. 26: Eminent economist Jayanth R. Varma on Sunday expressed hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, and said the next fiscal year is also expected to witness decent growth. Varma, who is also a member of the monetary policy committee (MPC) of the Reserve Bank, in an interview to PTI said inflation is a matter of concern, but as of now it is the persistence of inflation rather than its level that is of concern.

"I am quite optimistic about the Indian economy and its growth prospects... The next year (2022-23) is also expected to witness decent growth," he said.

According to Varma, the pre-pandemic level of economic activity has already been surpassed, and the rest of this financial year should also see further recovery.

He noted that calendar year 2021 saw dozens of new economy companies receive large funding both in private and public equity markets and these companies would have positive spillover effects into the rest of the economy.

"I am hopeful that in a few quarters from now, capital investment would also begin to pick up even in the old economy," the eminent economist said.

Asked about the coronavirus threat to the economy, he said the omicron variant does create uncertainties, but the world is slowly beginning to live with the Covid-19 virus.

"We should expect more new variants of the virus to emerge, but as vaccination coverage improves, the virus is becoming less dangerous," he said.

Varma said thanks to Covid protocols, most sectors of the economy now function with minimal risk to employees and customers. "This reduces the downside risks to economic growth."

On high inflation, Varma said the worry is that inflation is not coming down to the 4 per cent target, and there is a risk of it stabilising at 5 per cent instead for too long a period.