New Delhi, Dec 23 (Mayank Nigam) India’s economy grew faster during H1 of the current financial year than other economies, driven by strong demand and investment, the Finance Ministry said on Friday. The ministry in its latest economic review said inflationary pressures have been moderating since October, with CPI inflation tempering to an eleven-month low in November. ‘On top of that, it has fallen below the RBI’s upper target band for the first time in 2022, mainly driven by the decline in food inflation. Furthermore, inflation expectations have also moderated in the November round of the RBI’s Households’ Inflation Expectations Survey. This bodes well for augmenting consumption in rural and urban regions in the upcoming months,’ the ministry said. ‘Improvement in business and consumer sentiment is also likely to bolster discretionary spending.
The real investment rate during Q2:2022-23 prevailing at a high level of 34.6 per cent demonstrates the Government’s continued commitment towards asset creation,’ it said. The central government capital expenditure expanded by 61.5 per cent during the first seven months of 2022-23, reaching Rs.4.1 trillion, which is 54.6 per cent of the available budget, it noted. Private investment has been gathering pace and is expected to remain upbeat, also apparent in the rising sectoral deployment of bank credit growth, the ministry said. ‘The external front remains resilient, with stable foreign direct investment inflows, resurgent FPI inflows, and adequate foreign exchange reserves providing an import cover of 9 months. As a result, the Indian rupee has performed well compared to other EMEs. Despite the deterioration in global economic activity, exports have registered positive growth sequentially as well as yearly in Q2:FY2022-23 as per data released by NSO.
Altogether, India’s strong economic resilience is also confirmed by the World Bank’s recent upgradation of India’s growth forecast from 6.5 per cent to 6.9 per cent for 2022-23,’ the ministry said. The ministry said continued commitment to macroeconomic stability will underpin both economic performance and investor interest in India. ‘The latter is very high, currently. It needs to be nurtured. As the pandemic recedes more and more into the background, India needs to turn its attention towards medium-term challenges, such as securing technology and resources for energy transition and skilling its youth for the 21st-century economy while staying the course on fiscal consolidation at the general government level,’ the ministry said.