Finance Ministry’s report on agricultural production, alerted for possible threats
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Finance Ministry Economic Review: The Finance Ministry said in its monthly economic review on Tuesday that India needs to be alert to possible risks such as reduction in agricultural production, increase in prices and geopolitical changes. The ministry said in the March edition of the monthly economic review that the 6.5 per cent growth forecast for the current fiscal is in line with the estimates of the World Bank and the Asian Development Bank (ADB), but there are some factors that affect the present outlook. Projected growth and inflation may affect the favorable combination of results.
India’s economy remained strong in 2022-23
In the monthly economic review, it was said, El Nino which can create drought-like conditions. It is necessary to be vigilant in view of the possible risks such as reduction in agricultural yield and increase in prices, geopolitical changes and global economic stability. All three factors are said to affect the favorable combination of currently projected growth and inflation outcomes. It said that India’s economy has remained strong in 2022-23 despite the adverse conditions arising due to the Corona epidemic and geopolitical conflict.
Estimated growth at the rate of 7 percent
According to the report, the economy is showing strength and it is estimated to grow at a rate of 7 percent, which is higher than the growth of other major economies. Improving current account deficit, easing inflationary pressures and a banking system strong enough to withstand policy rate hikes seem to be increasing macroeconomic stability and making growth more sustainable.
RBI increased monitoring on banking sector
Regarding the financial sector, it was said in the report that RBI has increased monitoring of the banking sector and the institutions coming under its ambit have increased. Stress tests on banks are also done from time to time. According to the review, rapid withdrawal of deposits is unlikely as 63 per cent of deposits are made by households who do not withdraw promptly. Due to all these factors, the banks of India are different from the banks of America and Europe. Although the Consumer Price Index (CPI) for the whole year in 2021-22 was 5.5 percent, which increased to 6.7 percent in 2022-23, but according to the report, it remained at 6.1 percent in the second half of 2022-23, which was the first half. I had 7.2 percent.
These factors helped in controlling inflation
Softening international commodity prices, prompt measures by the government and monetary tightening by the RBI helped contain inflation at the domestic level, the report said. Inflationary expectations also appear to be stable, as seen in various surveys of households and businesses. It was said in the report that the foreign exchange reserves are increasing due to the decrease in current account deficit, inflow of foreign capital.
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