The Reserve Bank of India recently projected economic growth of 7% in the current fiscal year, up from 6.5% previously.
The Indian economy is expected to “comfortably” achieve a growth rate of above 6.5% in the fiscal year, the Ministry of Finance said in its Mid-Year Economic Review 2023 report on Friday-24. 24 regardless of risks stemming from external factors.
The Reserve Bank of India recently projected economic growth of 7% in the current fiscal year, up from 6.5% previously.
The report noted that better-than-expected growth in the second quarter of FY24 improved the growth outlook and prompted many domestic and international agencies to revise up their GDP growth forecasts for FY24. , adding that “momentum was gained in the second quarter of FY24”. will likely be maintained.” also in the third trimester.
In Q2FY24, India’s GDP grew 7.6%, about 60 basis points above market expectations.
On capital spending, the Ministry of Finance said the government had “not compromised” on its long-term goal of increasing capital spending on manufacturing, despite slowing growth in the first two months of the second half of the fiscal year. 24. In the first half of the year, annual capital expenditure growth was 43%, 7 percentage points above budget growth and falling to about 30%.
Data released by the Controller General of Accounts on Friday showed that the Centre’s capital expenditure stood at Rs 5.86 trillion during April-November, 31 per cent higher than the same period last year. In October and November, investment growth averaged (-)6.6% compared to the 58.9% increase recorded in the first half of the year.
The Ministry of Finance said: “…(Central) spending has been redirected to the immediate requirement of protecting the vulnerable through committed food subsidies, continued fertilizer subsidies and increase cooking gas subsidies.”
On growth, the report emphasized that high-frequency indicators in October and November reflected “strong” economic activity. The S&P Global Purchasing Managers’ Index of manufacturing and services remained in expansion territory in October and November. And October data from IIP and eight major industries also showed sustained growth. sustainability in production activities, the report said.
However, the core sector’s six-month low of 7.8% in November suggests some loss of momentum, which could also be reflected in the coming months.
The ministry said sentiment in the services sector remains optimistic and consumer demand growth is expected to be maintained. “Urban demand conditions remained stable, with higher growth in auto sales, fuel consumption and UPI transactions. Rural demand is also catching up,” the report said. , as evidenced by the strong growth in sales of two- and three-wheeled vehicles.”
The ministry also noted that the labor market has fully recovered to pre-pandemic levels. “High-frequency indices (such as EPFO, PMI) further reflect improvement in the overall employment situation across all sectors,” the report said, adding that the sector outlook Employment Employment looks bright, with employers intending to maintain or increase their workforce.
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