India seems to be in a better position in terms of developmentinflationThe finance ministry has said that the external equilibrium triangle for 2022-23, as compared to two months ago, does not necessarily project much optimism or pessimism in these “uncertain times”. The reform is a reflection of the swift economic policy response by the government and reserve Bank of IndiaThe ministry said in its monthly economic review.
“The resilience of the economy, especially in light of development challenges elsewhere in the world, is due to the continued efforts of the government and central bank to regain and preserve the underlying macroeconomic and financial stability. Some countries around the world are in better shape and can point to an improvement in their macroeconomic situation over the past few months: India is competent,” it said in the review released on Friday, August 19.
The review cited the IMF’s forecast for India’s economy to grow at 7.4 per cent in 2022-23, the highest among major economies. “The encouraging performance of some high frequency indicators during the first four months of 2022-23 is in line with the IMF forecast. The Index of Industrial Production and 8 core industries point to consolidating industrial activity, while PMI manufacturing hit an eight-month high in July, with a significant increase in new business and production.
The Reserve Bank of India (RBI) has projected a growth rate of 7.2 per cent for the current financial year.
On the price position, the report said that domestic and business expectations have moderated in the last two months. The ministry said this was an indication that the high inflation of the last few months has not been able to enter the anchor zone of inflation expectations. “In the absence of any further shock, the fall in global commodity prices coupled with RBI’s monetary measures and fiscal policies of the government is expected to ease inflationary pressures in the coming months.”
The finance ministry in its economic review further said that after the outbreak of the Russia-Ukraine conflict, increased uncertainty among investors has led to capital outflows not only from India but also from a group of emerging market economies (EMEs). whole. “Thus, apart from India, currencies of several EMEs also depreciated against the US dollar. between January and July
As of 2022, foreign portfolio investors have pulled out USD 48.0 billion from the group of EMEs as a whole. In the case of India, its relatively more liquid capital and foreign exchange markets were responsible for net FPI outflows as compared to Indonesia, South Africa and Mexico. As a result, the INR depreciated, as did the currencies of other EMEs.
However, it said, despite more liquid markets, 95 per cent of the assets under the custody of FPIs remained in India, reflecting the confidence of foreign portfolio investors in India’s economic strength.
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