The international economic system is on the mend with main economies seeing a growth rebound and danger perceptions about geopolitical dangers receding, providing a possible upside for growth at the same time as India’s financial efficiency stands out and its key indicators for March replicate a buoyant home financial panorama, the Finance Ministry mentioned on Thursday.
Terming the excessive food inflation problem in a number of main world economies a ‘situation’ warranting continued consideration, the ministry famous in its financial evaluation for March that India’s food inflation eased to 8.5% final month, from February’s 8.7%, whereas headline retail inflation slowed to a 10-month low of 4.85%.
Core inflation, which excludes food and vitality prices, eased to 3.3% in March, and an extra cooling of home food prices was on the anvil, the ministry mentioned, citing the above-normal monsoon projection for the yr that bodes effectively for a very good harvest. It did, nonetheless, warning that the latest uptick in inflationary pressures throughout nations together with persistence in core inflation warrants consideration.
“Global commodity prices increased in March 2024, driven by both energy and non-energy commodities. Crude oil prices have firmed up since December 2023, partially driven by increasing tension in West Asia and OPEC+ countries deciding to maintain supply constraints until mid-2024,” the ministry famous, including that food prices had additionally firmed up in March, following a seven-month-long declining pattern, pushed primarily by rising prices of vegetable oils.
“While a record rabi crop will help in moderating cereal prices, the increasing occurrence of weather shocks poses an upside risk to food prices. Geopolitical tensions and their effect on oil prices add to this risk,” the ministry acknowledged.
Growth outlook
While geopolitical tensions stay a priority, danger perceptions have softened, providing a possible upside for growth and India continues to exhibit sturdy financial efficiency, the ministry mentioned, citing robust home demand, rural demand pickup, sturdy funding, and sustained manufacturing momentum.
Stressing that forecasts of excessive growth charges for India from the International Monetary Fund and the Reserve Bank of India additional bolstered the optimistic outlook, the ministry mentioned that improved client and investor confidence underpinned the nation’s potential to navigate international challenges efficiently.
“In March 2024, India’s economy was marked by record-breaking stock market performance, remarkable GST collections, and substantial growth in the manufacturing and services sectors, reflecting a buoyant domestic economic landscape.
Arguing that February’s industrial output numbers “brought forth encouraging insights into India’s industrial landscape”, the ministry highlighted the 12.3% growth in client durables’ manufacturing whereas linking the contraction in client non-durables to ‘fluctuations in consumer demand patterns’.
The ministry attributed the moderation in internet FDI inflows, which fell to $25.5 billion within the first 10 months of 2023-24 from $36.8 billion a yr earlier, to “a rise in repatriation/disinvestment” and mentioned that India fared higher than its Asian friends.
“India’s foreign exchange reserves reached an all-time high of $645.6 billion as of March 29, 2024, sufficient to cover 11 months of projected imports and more than 100% of total external debt,” the ministry identified.
