April 16, 2024

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India has ‘bright’ outlook for next fiscal: Finance Ministry | Business News

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Strong growth along with stable inflation and external account and improving employment outlook have supported the Indian economy as it nears the end of the current financial year, the Finance Ministry said in its monthly economic review on Friday. Even though there are headwinds like indications of hardening crude oil prices and global supply chain bottlenecks to trade, India, on the whole, has a “bright outlook” for the financial year 2024-25, it said.

While foreign direct investment inflows are still awaiting momentum, foreign portfolio investors turned net buyers in February and the number of new project announcements remained stable, keeping India among the top five destinations for global greenfield projects, the review said.

The Monthly Economic Review for February also said inclusion of Indian bonds in the Bloomberg bond index from January 2025 should bolster inflows.

Robust investment activity is driving growth amid a steady rise in consumption, it said. “While consumption remained steady, robust investment activity is driving growth. The continued focus on public investment seems to have crowded in private investment. Strong aggregate demand has stirred manufacturing and construction activities and accompanying professional, financial and real estate services,” it said.

It, however, said that an increase in domestic household savings will be necessary to finance private sector capital formation in the economy.

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Increased demand for residential properties in tier-2 and tier-3 cities augurs well for furthering construction activity, it said. Non-farm employment has revived, improving the capacity to absorb the labour leaving agriculture. “The ascent of manufacturing sector employment is expected to be marked by upscaling of enterprises and sunrise sectors emerging as catalysts for generating quality employment,” it added.

Stating that the government’s capex strategy is not limited to physical infrastructure, it said it has also prioritised the technological landscape to catalyse artificial intelligence (AI) innovation via a public-private partnership by approving the “India AI Mission” with a budget outlay of `10,300 crore. This will help to build computing infrastructure, develop indigenous AI capabilities, attract AI talent, and financing AI start-ups.

India grew above 8 per cent for three consecutive quarters, reaffirming its position as a standout performer amid sluggish global growth trends. Various agencies echo a similar sentiment revising the FY24 growth estimates of India closer to 8 per cent, the ministry said. Core inflation is trending downwards, indicating a broad-based moderation in price pressures. The pick-up in summer sowing is likely to help reduce food prices, it added.


 


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