Outlook for Indian economy appears bright: FinMin report
During the current financial year, the Indian economy is estimated to grow at 7.3 per cent. This would be the third year in the row when the GDP would grow in excess of 7 per cent
PTI
New Delhi, 20 Feb
The outlook for the Indian economy
appears 'bright' with GDP likely to clock 7 per cent growth rate next fiscal
although the nation needs to keep a watch on global headwinds emanating from
geopolitical tensions and volatility in international financial markets, a
finance ministry report said on Tuesday.
During the current financial year,
the Indian economy is estimated to grow at 7.3 per cent. This would be the
third year in the row when the GDP would grow in excess of 7 per cent. Driven
by a better-than-expected performance in Q2 and above 7 per cent growth
projection for FY24 (by Ministry of Statistics and Programme Implementation in
its first advance estimates), many global agencies have revised India's growth
projection in the upward direction, the Monthly Economic Review released by the
finance ministry said.
This reflects the resilience of the
Indian economy to sustain its growth path amidst ongoing geopolitical
headwinds, it said, adding, the measures announced in the Interim Union Budget
FY25 are expected to play a pivotal role in supporting India's growth journey
ahead.
Talking about tailwinds for the
next financial year, the report said prospects of healthy Rabi harvesting,
sustained manufacturing profitability and underlying service resilience are
expected to support economic activity in FY25.
On the demand side, household
consumption is expected to improve, while prospects of fixed investment remain
bright owing to an upturn in the private capex cycle, improved business
sentiments, healthy balance sheets of banks and corporates, and the government's
continued thrust on capital expenditure, it said.
Improvement in the outlook for
global trade and rising integration in the global supply chain will support net
external demand, it said. However, headwinds from geopolitical tensions,
volatility in international financial markets, and geoeconomic fragmentation
need watching, it said.
Global slowdown, it said,
especially in India's major trading partners, has led to a slowdown in demand
for India's merchandise exports. At the same time, it said, there has been a
decline in the overall value of imports due to a fall in international
commodity prices, which spiked after the outbreak of the Russia-Ukraine
conflict.
This has led to a narrowing of
India's merchandise trade deficit in the first ten months of FY24, it said,
adding, a narrowing merchandise trade deficit, coupled with rising net services
receipts, is expected to result in an improvement in India's current account
deficit.
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