HomeBusinessBright growth prospects promoting high imports, giving them top priority: Finance Ministry

Bright growth prospects promoting high imports, giving them top priority: Finance Ministry

Finance Ministry says economy poised to grow at 7.2 per cent even though average growth of only 5.4 per cent in next 3 quarters

Finance Ministry says economy poised to grow at 7.2 per cent even though average growth of only 5.4 per cent in next 3 quarters

India’s growth has remained strong and inflation is under control, even as the world’s major economies continue to suffer from slow growth and high inflation, the Finance Ministry said on Saturday, assuming that the economy this year driven by a revival in consumption, employment at 7.2% Growth and investment.

Financing India’s imports, which have stood at over $60 billion for six consecutive months, will have to be accorded high priority, the ministry said, linking the ‘sharp growth’ in imports to the country’s ‘bright’ growth prospects.

“The increase in the price of imported goods This not only increased headline inflation but also widened the trade balance. However, with global supply-chain disruptions and fall in commodity prices, inflationary pressures are expected to ease and trade balance is expected to improve,” the ministry said in its monthly economic review for August.

The monthly freight trade deficit hit a record $30 billion in July as export growth slowed, and remained uncomfortably high in August at around $28 billion. Indian consumers have faced over 6% inflation since January this year, clocking in at 7% or more in four of the past five months.

The finance ministry attributed the ‘acceleration in inflation in 2022 compared to 2021’ on rising prices of imported goods, disruption in global supply side and the revival of demand in advanced economies coupled with the easing of the pandemic.

“The relatively rapid growth and relatively strong external sector is now set to converge with the fall in inflation to provide India with a strong macroeconomic outlook for the remainder of the current year,” it said.

“The downside risk to growth will remain until India is integrated with the rest of the world. Nor is there any room for complacency on the inflation front as less sowing of crops for kharif season without jeopardizing agricultural exports for efficient management of stock and market prices of agricultural commodities,” the ministry said.

The ministry said that with the economy growing at 13.5% in the first quarter of this year, India’s real GDP is now at ‘about’ 4% over pre-Covid levels, which is ‘for India’s growth revival in the post-pandemic phase’ A strong start’.

In the next three quarters, real GDP needs to grow ‘on average (only) by 5.4 per cent each quarter’ in order to achieve 7.2 per cent growth in the country. 2022-23 as projected by the Reserve Bank of IndiaIt underlined citing positive outlook on consumption, investment and employment.

“The contact-intensive services sector is likely to drive growth in 2022-23, which is close to demand reduction and universalisation of immunisation. A sharp spurt in private consumption, driven by rising consumer sentiments and rising employment, will sustain growth in the months to come.

However, policy makers cannot remain complacent and may ‘sit back for a long period’, the ministry cautioned while emphasizing ‘perpetual macroeconomic vigilance at the cost of stability and sustained growth’ in this uncertain time.

“In the winter months, the international focus on energy security in advanced countries could escalate geopolitical tensions, which could test India’s shrewdness in handling energy needs so far,” it added. Indicates as one of.

While advanced economies have been rushing to contain inflation and dealing with liquidity surpluses with their easy money policies during the pandemic, which the finance ministry termed as an ‘incredible act’, it stressed that India is trying to reduce its liquidity levels. In a better position to check. Stopping development suddenly.

“Careful and prudent fiscal management and credible monetary policy will remain essential for India to meet its growth aspirations. Both these pillars of public policy will be able to reduce the benchmark borrowing cost for the government and the private sector, thereby facilitating capital formation of the public and private sector,” the ministry lamented.

“The vigorous pursuit of asset monetization at all levels of government will help reduce debt stock and hence debt servicing costs. This will reduce the risk premium and improve India’s credit rating. In view of this a virtuous cycle will be established with increasing quality of public expenditure and private sector enjoying lower cost of capital,” it averages.

“The current financial year has the potential to lay a strong foundation for sustained economic growth, improved resilience and enhanced competitiveness of ‘Make in India’ during the AMRUT period,” the review concluded.

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