While domestic macro fundamentals are strong and improving, downside risks arise from global headwinds and uncertainties in weather conditions, cautioned the September edition of the Monthly Economic Review by the ministry.
India will be the fastest-growing major economy in FY24 on the back of strong domestic fundamentals and congenial inflation expectations, finance ministry said.
While strong domestic macro fundamentals and improving, downside risks arise from global headwinds and weather uncertainties.
The government’s fiscal position is solid with steady revenue growth.
Yet, the smooth downward trajectory observed in core inflation is likely to keep the headline inflation within the target band, it noted.
Strong private consumption demand has been a major driver of India’s economic growth in the recent period. In addition, at least two additional drivers of growth have emerged.
The first is the gradual strengthening of investment demand. Investment has hitherto been propelled mainly by the capital spending of the government and the crowding-in it induced for private corporate investment.
While this continues unabated, increasing demand for residential properties, supported by responsive housing loan financing, has given a fillip to construction activity and the property markets.
The second is the firming of industrial activity. Improving corporate balance sheets and their fledgling investment activity, supported by a strong and emerging banking system and financial market makes this outlook brighter, the report noted.
The major macroeconomic concomitants of growth have also generally remained robust. Inflationary pressures have eased significantly in September, confirming that the spikes in the previous two months were temporary.
The fiscal position of the government remains solid with steady revenue growth. Employment trends are encouraging. While the labour force participation rate is improving steadily, the unemployment rate is declining.
On a year-on-year (YoY) basis, the current account balance and its components, viz, merchandise trade and invisibles, have performed better in the first quarter of this fiscal (Q1 FY24).
In September 2023, imports moderated much sharper than exports, improving the overall trade balance significantly on a YoY basis.
Fibre2Fashion News Desk (DS)