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“Exceptional macro-economic management amid unprecedented global challenges has put India on a path to recovery faster than was the case in other countries,” the finance ministry said in a report by the Ministry of Finance. July 6.
“Supply-side infrastructure investment has raised the possibility that India will enjoy sustained economic growth for longer than it has in several decades,” the Monthly Economic Review said in May and the 2023 annual review.
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“India appears poised to sustain its growth in a more sustainable manner than before,” the report says, “yet this is not the time to rest on laurels or risk painstakingly and consciously diluting economic stability. If we are patient, the rising tide will lift all boats as it began to do.
The report says that despite the unprecedented global challenges of recent years on top of balance sheet problems in India’s banking and non-financial sectors, “macroeconomic management has been outstanding. This has contributed significantly to bolstering India’s macroeconomic stability and putting India on the path to recovery faster than was the case in other countries.
Observing that a critical cog in the wheel of economic growth in FY23 was the central government’s disciplined fiscal stance, the report states, the year ended with a lower fiscal deficit (as a percentage of GDP ) compared to the previous year.
“Yet the government could cut entitlements and increase social spending to ease the stress of inflation,” he said, adding that the government could also maintain its strengthened provision for capital spending, which leads now to the influx of private investment.
The report highlighted that India’s economy continued its momentum from FY23 into the current FY and high-frequency indicators paint a healthy picture of the state of the economy.
Urban demand conditions remain resilient, with higher growth in auto sales, fuel consumption and UPI transactions, he said, adding that rural demand is also on the road to recovery. , with robust growth in two- and three-wheeler sales.
“The Goods and Services Tax collection, Purchasing Managers Index (PMI) for the manufacturing and services sector continues to grow,” he said.
On the global front, he said, the recovery in economic activity during the first quarter of 2023 also continued into the second quarter, as evidenced by the expansion of the global composite PMI index.
“However, factors that may limit the pace of growth include escalating geopolitical tensions, increased volatility in global financial systems, a sharp price correction in global equity markets, a high magnitude of the impact of El -Nino and modest commercial activity and FDI inflows due to fragile Global demand.
“If these developments deepen and dampen growth in subsequent quarters, the external sector could challenge India’s FY24 growth outlook,” he said.
Speaking of the higher-than-expected GDP estimate for 2022-23, the report said a strong performance in the last quarter pushed GDP growth for the year as a whole to 7.2%, higher than the 7% estimated in February.
“The country’s impressive growth experience in FY23, when the global economy was buffeted by inflation and dragged down by monetary tightening, is a tale of what works or doesn’t work for the country. Indian economy,” he said, adding what is clearly working for the Indian economy. is the strength of its domestic demand.
“The pandemic had struck at its roots to cause an unprecedented contraction in output in FY21, but domestic demand has since recovered and strengthened in FY23,” said he declared.