‘Effects of geopolitical tensions on food, fertiliser, crude oil prices cloud growth prospects’
‘Effects of geopolitical tensions on food, fertiliser, crude oil prices cloud growth prospects’
According to a Finance Ministry report, Mobility and Production Linked Incentive (PLI) schemes will remove global bottlenecks and boost investment, resulting in higher post-recovery growth for the Indian economy.
Geopolitical conflicts and their consequent impact on food, fertilizer and crude oil prices cast a cloud on the growth outlook globally, according to the monthly economic review prepared by the ministry.
India may feel its impact, although the magnitude will, of course, depend on how long the dislocation in energy and food markets persists in the fiscal year and how resilient India’s economy is to mitigate the impact, The ministry pointed out that there may be momentary tremors with no major impact on real growth and inflation.
“By addressing these potential headwinds, dynamism and production-linked incentive schemes will boost investment, coupled with supply chains that have been strengthened by structural reforms undertaken in the past few years, to provide high post-recovery growth for the Indian economy, “It said.
With increasing evidence of government’s unwavering commitment to improving labor force participation and declining unemployment rate and providing sustained support to the financially poor (PM Garib Kalyan Yojana extended for another six months, till the end of September 2022) was given), the growth path forward will likely be more inclusive, it said.
The ministry said PMI services have been in expansion zone for eight consecutive months as complemented by a strong manufacturing sector along with e-toll collection, e-waybill, railway freight and air cargo.
GST collections had crossed the 1.4 lakh crore mark in March, marking the beginning of a post-recovery growth spurt, it said, adding that advanced PMI services also reflect growth in contact-based services, as the state progressively relax in view of the pandemic-induced restrictions. India’s COVID-19 vaccination coverage is rising faster than the decline in new infections.
Against this background, private consumption may be beginning to rise. The ministry said UPI transaction value and volume more than doubled in FY22, with UPI transaction volume crossing 5 billion in a month for the first time in March.
Noting that capital investment by the central government for the period April 2021 to February 2022 had exceeded the levels of the corresponding period of the pandemic and pre-pandemic years, it said, there were new indications that private investment in rising public capex had There can be a crowd. as well.
In a major vote of confidence in the attractiveness of the Indian economy as a major foreign investment destination, gross FDI inflows into the economy increased to $69.7 billion in April-January FY22, the ministry said in the report.
Investments funded through external commercial borrowings (ECBs) have been growing steadily, registering a growth of 29.7% during April-February FY22 as compared to a year ago.
It added that rising FDI and other capital inflows have ensured a comfortable foreign exchange reserve position with import cover of more than 12 months.
The ministry further said that a broad-based economic recovery has also driven growth of employment opportunities, as reflected in net EPF subscribers reaching 15.3 lakh in January 2022, up 37.4% from a year ago. is more.