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Monthly Economic Review | Surge in consumer spending will keep India’s growth afloat

The report noted that private consumption rates have helped private sector capital expenditure reach its highest level in the last decade

The report noted that private consumption rates have helped private sector capital expenditure reach its highest level in the last decade

The government in its August Monthly Economic Review published on Saturday said a sharp jump in consumer spending and rising employment will sustain economic growth in India in the months to come.

It said growth in private consumption and higher capacity utilization rates have helped private sector capital expenditure reach its highest level in the last decade.

Business investment, stimulated by government spending in April-August compared to the same period a year ago, climbed 35%, the report said, adding that tax revenues for the government increased happened.

The report also noted that high levels of foreign exchange reserves, sustained foreign direct investment and strong export earnings provided a reasonable buffer against the normalization of monetary policy in advanced economies and the widening of the current account deficit resulting from geopolitical conflict. Is.

The Reserve Bank of India on Friday projected the country’s current account deficit to be within 3% of GDP in the current financial year till March 2023 and said it was “eminently financed”.

India is in a better position to check its liquidity levels without stalling rapid growth, the report said, adding that inflationary pressures in the country are easing.

But it also said that in the winter months, geopolitical tensions could escalate amid a growing international focus on energy security and it could “test India’s shrewdness in handling the energy needs so far.”

“In these uncertain times, it may not be possible to be content and sit back for long. Eternal macroeconomic vigilance is the price of stability and sustainable development.”

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