Finance Ministry report: India’s major economy would continue to grow at the quickest rate in FY’24.

Based on robust internal fundamentals and low inflation forecasts, India’s major economy will continue to grow at the fastest rate in the world in the 2023–24 fiscal year, according to a report released by the finance ministry on Monday.

The Monthly Economic Review’s September issue also noted that recent events in the Persian Gulf have increased global unease, and that crude oil prices may rise in response to how things play out. Financial conditions may also be restricted due to the US Treasury’s constant supply and the country’s ongoing tight monetary policy, which might lead to even further tightening of the policy.

The US stock markets are more vulnerable to negative than upside risk at the moment. The research stated that other markets would be impacted if the negative risk came to pass. Global risk aversion may rise generally when geopolitical tensions are high. According to the government, “economic activity in other countries, including India, may be affected if these risks worsen and persist.”

Nonetheless, the analysis emphasized that India’s macroeconomic prospects are favorable and firmly supported by robust internal fundamentals for the fiscal year 2023–2024. In addition to individual spending, demand for investments is also increasing.

Both robust residential real estate markets and widespread industrial expansion provide additional growth drivers. The use of industrial capacity has increased. The study also stated that higher reservoir levels portend favorably for the approaching Rabi season. Food inflation has decreased, but core inflation is still gradually falling.

The government stated that India’s external account seems strong, with a reduced trade deficit and a comfortable position in foreign exchange reserves. All of this is supported by the positive results of the Reserve Bank of India’s forward-looking surveys on manufacturing, consumer confidence, employment, and inflation expectations.

Overall, the research stated that India’s major economy will continue to develop at the highest rate in the world in FY24, as confirmed by IMF predictions. The IMF updated its growth prediction for India upward by 20 basis points to 6.3% in October, but left the world growth estimate for FY24 constant at 3%.

According to the ministry, this demonstrates the rising trust that international experts have in India’s economic resilience in the face of ongoing geopolitical concerns and worldwide unpredictability. The report also stated that although domestic macroeconomic fundamentals are solid and becoming better, there are negative risks due to global headwinds and weather-related uncertainty.

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