Image used for representational purposes only. | Photo credit: The Hindu
India is well positioned to grow at a “moderately rapid rate” in coming years on the back of macroeconomic stability, despite global monetary tightening, a finance ministry report said on Thursday.
He further said that inflationary pressures will ease in the coming months with the arrival of kharif crops and at the same time job opportunities will increase with improving business prospects.
The “October 2022 Monthly Economic Review” also warned that US monetary tightening is a “future risk” that could lead to lower stock prices, weaker currencies and higher bond yields, driving down costs of higher borrowing for many governments around the world.
He said a rapidly deteriorating outlook for global growth, high inflation and deteriorating financial conditions heightened fears of an impending global recession.
The fallout from the global slowdown could weigh on the outlook for India’s exporting companies. However, resilient domestic demand, a reinvigorated investment cycle as well as a strengthened financial system and structural reforms will provide impetus for economic growth in the future.
“In a world where monetary tightening has weakened growth prospects, India looks well positioned to grow at a moderately strong pace in the years ahead due to its focus on macroeconomic stability,” indicates the report.
The ministry said that so far this year, India’s food security issues have been resolved and will continue to receive the highest priority from the government.
“The easing of international commodity prices and the arrival of new kharif should also ease inflationary pressures in the coming months,” he said.
Wholesale and retail price inflation in India eased in October after remaining high for most of the year, mainly due to supply chain disruptions following the outbreak of the Russian-Ukrainian war in february.
Retail inflation or CPI fell to a 3-month low of 6.7%, while wholesale inflation or WPI was at a 19-month low of 8.39% .
Russia and Ukraine are among the main producers of essential agricultural products, including wheat, corn, sunflower seeds and inputs such as fertilizers.
Together with other countries bordering the Black Sea, they constitute the breadbasket of the world.
Along with an uncertain macroeconomic outlook, the year 2022 has also highlighted the vulnerability and interdependence of the global food system to shocks, the ministry said.
India’s grain availability has been affected by unseasonable heat waves and insufficient south-west monsoon in the current year. However, export restrictions have made it possible to fully meet the country’s needs, he added.
Regarding the employment situation, the ministry said that in India, the resumption of economic activities in all sectors has improved the overall employment situation in the country.
Net payroll additions at EPFO saw double-digit growth in September 2022, reflecting a better formalization of the economy.
“Business hiring should see improvement over the coming quarters, driven by a rebound in new business hiring as businesses continue to benefit from the lifting of COVID-19 restrictions and the optimism generated by strong sales volumes recorded during the holiday season,” the ministry said.