New Delhi, Sep 26 (Mayank Nigam) Higher public expenditure in the remaining part of the current fiscal (2024-25) would give further impetus to growth and investment, as per a monthly publication of Finance Ministry released on Thursday. Noting that above 5% growth across all major non-agricultural sectors in the April-June quarter (Q1) of current fiscal indicated broad-based expansion, the publication for the month of August 2024 said that overall growth is expected to remain steady in the subsequent quarters. The report underlined the strong domestic growth but highlighted the challenges on the external front.
“A challenge on the macroeconomic front is of navigating the continuing uncertainty in global economic prospects. We will likely encounter a cycle of policy rate cuts globally, amid fears of a recession in advanced economies and continuing geopolitical conflicts,” said the publication titled Monthly Economic Review. The report said that India’s export of goods, even after accounting for the decline in the prices of petroleum products, has grown negligibly in the first five months of the year compared to the same period last year. “It reflects weak global demand and India’s persisting challenges with scaling up production, productivity and competitiveness. At the same time, strong domestic demand meant that merchandise imports grew well,” the report said. The report said that urban consumption has shown some signs of weakness and was evident in the decline in automobile sales in the first five months of the current financial year compared to the same period last year. It further said that capital flows have remained steady, and FDI inflows have increased.
“Foreign portfolio investors remained net buyers over April-August 2024. Driven by stable capital inflows, foreign exchange reserves have reached historically highest levels,” it said. The monthly publication said that labour market conditions continue to improve and net payroll additions under EPFO witnessed an upswing in the quarter ending June 2024, signalling a rebound in formal job creation. The report noted that headline retail inflation remained benign in August 2024 at 3.7%, with softening food inflation and steady core inflation. “While replenished reservoir levels and higher kharif sowing acreage augur well for the food price outlook, the effect of the skewed spatial distribution of the monsoon warrants monitoring,” it said. “On balance, as public expenditure picks up and the rural economy strengthens, the overall growth is expected to remain steady in the subsequent quarters,” the monthly report concluded. The Monthly Economic Review suggested that the economy would log 6.5-7% growth in FY25 in line with projections given in the Economic Survey 2023-24.