Fin Min evaluation calls the economy’s performance “impressive” despite rising inflation and a weak rupee
The monthly economic review for September stated that the country’s economic performance has been “impressive” in the first half of 2022–23, despite the fact that rising inflation and economic growth continue to be major concerns for India. Finance Minister Nirmala Sitharaman has stated that the next Union Budget will put a special emphasis on these two issues. “In comparison to the rest of the globe, India’s economic performance in the first half of 2022–23 has been excellent. When compared to the global average of 51.0, India’s economic activity between April to September 2022 was greater, at 56.7, according to the PMI composite index “said the economic review, which the Finance Ministry released on Saturday.
“Due to government initiatives and moderating commodity prices, wholesale inflation notably declined from its peak of 16.6% in May 2022 to 10.7% in September 2022; nonetheless, retail inflation remained beyond the RBI’s upper tolerance range as a result of rising food prices. However, as the harvesting and purchasing seasons advance, food inflation is anticipated to reduce, which will help to lower headline retail inflation for the remainder of the fiscal year “It added more information about inflation.
In comparison to other major economies, the rupee has performed relatively well in the first half of 2022–2023, indicating the robust fundamentals of the Indian economy. Interestingly, the rupee hit a record low of 83.18 earlier this week, despite Sitharaman’s assertion that she believed the dollar was gaining rather than the currency dropping. The government should be able to manage these obstacles and maintain steady economic growth, according to the economic review for September 2022.
“Prudent macroeconomic measures, which have helped the nation since 2014, are still crucial. Balls well left (policy errors avoided) will be just as crucial as balls played properly (policy judgments taken), similar to how it is when batting in swinging situations “It read. Continuous capital spending by the central government encourages broad-based growth by encouraging private sector capital formation. GST revenues have increased significantly as a result of the significant increase in spending. A more robust economic recovery would allow the collections to stabilise at an elevated level, demonstrating the high revenue productivity of the overall consumption, the assessment added.
Credit is now being distributed more often to the retail, industrial, and services sectors thanks to a banking system with adequate capital. “High-Frequency Indicators (HFIs) point to a continuous expansion of services activity traction. Particularly E-way invoices indicate the general expansion of interstate wholesale and retail transactions. According to the analysis, the service industry will continue to rise as a result of “pent-up demand in the sector, coupled with a positive economic prognosis for India.” Service sector firms are positive about demand conditions, sales turnover, their hiring plans and the overall business situation they expect in the third quarter of the current fiscal.
Nevertheless, it stated that “The fiscal and monetary authorities of the nation must exercise prudence even while India continues to be one of the few bright spots in a generally bleak global environment where the black clouds of recession are gathering. Because of its globalisation, India’s economy foretells that pressures from the external sector would become a new threat to macroeconomic stability even as inflationary pressures subside “. On the one hand, the US Federal Reserve is still aggressively battling inflation, indicating future interest rate increases. This might decrease capital inflows, put more pressure on the currency to weaken, and raise the price of imports of necessities. However, a poor prognosis for the world economy will inevitably restrain export growth, impacting the country’s trade balance, according to the study.
(source : IANS)
