India’s main economy is still expanding at the quickest rate: Finance Ministry

The finance ministry said on Thursday in its monthly economic review report that India is still the major economy with the quickest rate of development, with evaluations of the growth prognosis for the current fiscal year from foreign organizations and the central bank being favorable.

 

India’s resilience has been bolstered by a number of factors, including healthy investment, continued industrial momentum, strong domestic demand, and rural demand growth. The RBI and IMF’s projections for India’s growth rate are strong, which supports the country’s optimistic outlook, according to the ministry.

The IMF revised up its forecast for India’s real GDP growth in FY24 to 7.8% in its April 2024 World Economic Outlook (WEO), from 6.7% in January 2024 and 6.3% in October 2023. The research claims that the world economy is steadily improving, with growing economies in major regions and dwindling fears of a recession.

However, there are geographical differences, with some regions experiencing mild economic circumstances. Despite these differences, leading indications suggest an overall economic recovery driven by expansion in the service and industrial sectors.

The paper states that controlling inflation is still vital on a worldwide scale. Retail inflation in India fell sharply in FY2023–24, reaching its lowest level since the Covid-19 crisis. As a result, the Monetary Policy Committee of the RBI chose to keep the existing policy rates in place while highlighting the need of continuing to lower inflation in order to continuously maintain it at the 4% objective. For FY 25, the RBI has estimated that retail inflation would be 4.5%.

According to the research, the decline in global commodity prices and the slowdown in demand in developed nations have resulted in a narrowing of India’s exports.

As a consequence of the trade slowdown, the merchandise trade deficit shrunk in FY2023–2024, with exports contracting less than imports. The study said, “Yet the item exports that aren’t related to petroleum, stones, or jewelry have showed resilience with a persistent upswing in the previous few months, expanding at a rate of 3% in FY2023–24.

In FY24, retail inflation declines significantly.

Retail inflation in India fell sharply in FY24, reaching its lowest level since COVID-19. As a result, the RBI’s MPC chose to keep the policy rates at their present levels while highlighting the need of continuing to lower inflation in order to continuously keep it at the 4% objective. For FY25, the RBI has forecasted retail inflation at 4.5%.