Even although a downward ‘adjustment’ in inflation could take longer to happen, particularly if international commodity costs don’t return to pre-pandemic ranges, India’s consumer demand stays strong regardless of inflationary pressures. File.
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Even although a downward ‘adjustment’ in inflation could take longer to happen, particularly if international commodity costs don’t return to pre-pandemic ranges, India’s consumer demand stays strong regardless of inflationary pressures and the revision in private revenue tax slabs proposed within the Union Budget ought to enhance consumption and spur growth, the Finance Ministry stated on Thursday.
Citing excessive frequency indicators from December 2022 and January, the Ministry averred in its month-to-month financial overview that the economic system was on observe to develop 7% in 2022-23, with general demand situations remaining conducive to supporting financial exercise.
On growth prospects for 2023-24, the Ministry cited the Economic Survey’s estimate of 6.5% growth “with more downside than upside risks” and harassed that the geopolitical atmosphere remained “fraught”, which might spur extra financial dislocation and provide chain disruptions. Predictions of El Nino situations returning to India this 12 months, if correct, may lead to poor monsoon rains, hit farm output and fire up costs, the Ministry cautioned.
“The most recent consumer confidence survey for January… suggests a tentative recovery in consumer confidence as the survey assesses the prospects for prices and employment in the year ahead,” it identified, including that inflation dangers have been probably to be decrease in 2023-24 however wouldn’t have vanished.
Asserting that the second half of 2022-23 had seen a “downward trend” in headline inflation due to measures taken by the federal government, the central financial institution and a downswing in international commodity costs, the Ministry acknowledged that the decline had been at “less than desired pace for some commodities”.
With retail inflation resurging to 6.5% in January after two months under the 6% mark, the Ministry asserted {that a} decline in inflation typically doesn’t happen in a straight line “as prices are usually downward sticky”.
“Indeed, the adjustment may prolong if global commodity prices do not gravitate to pre-pandemic levels. This could happen with consumption demand staying robust in the U.S., and reopening of the Chinese economy refuelling global demand,” it concluded.
