India To Continue As Fastest Growing Major Economy In FY24: Finance Ministry Report

The ministry released the September edition of it’s Monthly Economic Review and stated that the latest developments in the Persian Gulf have enhanced global uncertainties.

India will continue to be the fastest-growing major economy in the world in the current financial year helped by the robust domestic fundamentals and benign inflation expectations, a report by the finance ministry said on Monday. 

The Ministry of Finance released the September edition of it’s Monthly Economic Review and stated that the latest developments in the Persian Gulf have enhanced global uncertainties and crude oil prices are expected to surge on the basis of these events, reported PTI. 

The ministry noted that the relentless supply of US Treasuries and consistent restrictions in the monetary policy in the US could lead to restrictions in the financial conditions. The report stated that the present stock market levels in the US are at a greater downside risk. If this risk materialises, this will impact other markets as well. 

The report further noted that the disturbed geopolitical conditions can lead to an increase in global risk aversion. “If these risks worsen and are sustained, they can affect economic activity in other countries, including India,” the ministry stated. 

The report stressed that the country’s macroeconomic outlook for the 2023-24 fiscal year remained positive. In addition to private consumption, investment demand in the country is also strengthening, the study noted. “There are additional growth levers in broad-based industrial growth and buoyant residential property markets. Industrial capacity utilisation has improved,” the ministry said. Additionally, the report noted that the upcoming Rabi season will benefit from the improvement in reservoir levels. 

Commenting on the country’s external account books, the report stated that the books looked strong due to a lower trade deficit and ‘comfortable forex reserves position’. The Reserve Bank of India’s forward-looking surveys on manufacturing, consumer confidence, employment, and inflation expectations also agreed with the outlook and gave positive indications for the sectors. 

The report said that the IMF projections stand confirmed and India will stay the fastest-growing major economy in the world in FY24. Notably, the IMF maintained an unchanged global growth projection for the current fiscal year, but gave a revised growth projection for India for FY24, up by 20 basis points to 6.3 per cent in October. The ministry commented that this projection indicates the increasing confidence of global experts in India’s economic strength amidst a volatile geopolitical environment.