 "economy")
India’s domestic economic momentum and stability, low to moderate input cost pressures, and anticipated policy continuity are significant buffers against global inflationary pressures and supply-chain disruptions due to geopolitical stress, the Finance Ministry (FinMin) said in its half-yearly economic review 2023-24 released on Friday.
The government’s prudent fiscal policy and re-prioritisation of expenditure towards the immediate requirement of safeguarding the vulnerable would support India’s economic growth prospects without compromising productive capital spending, the review said.
The FinMin said the Indian economy would comfortably achieve the growth rate upwards of 6.5 per cent in FY24. India’s high-frequency indicators for October and November 2023, the report said, reflect robust economic activity in the third quarter of FY24, which is likely to continue in Q4 as well.
The report also highlighted that the relatively stable Indian rupee against the US dollar and other prominent currencies, and adequate foreign exchange reserves, add to the optimism.
The review released by the Department of Economic Affairs (DEA) said the risks to the growth and stability outlook mainly emanate from outside the country.
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“The better-than-expected growth in Q2 and the emergence of India as the fastest-growing major economy in H1 of FY24 have improved the growth prospects and prompted various domestic and international agencies to upgrade GDP growth projections for FY24,” the review said.
India’s real GDP grew by 7.6 per cent on a year-on-year basis in the second quarter of FY 2024.
The DEA review said that the foreign direct investment (FDI) inflows are expected to resurrect in the medium term as strong government support, a stable macroeconomic environment, and rising growth in India are enabling conditions for boosting FDI inflows. “Evidence to this effect is seen in a sharp rebound in FDI in October,” it said.
The review also noted that India’s net FDI flows have been negatively impacted by external factors, such as the economic crisis due to the Russia-Ukraine conflict, the rise in global protectionist measures, a spike in interest rates, and the decline of real GDP growth rates of Singapore, the USA, and the UK.
