The Indian economy continues to forge ahead, defying global economic slowdown, thanks to robust investment activity and a surge in private consumption, according to the latest monthly review by the Finance Ministry.
Various indicators underscore the buoyancy in demand, including a notable increase in air passenger traffic, robust sales of passenger vehicles, a surge in digital payments, enhanced consumer confidence, and optimism regarding a normal monsoon season, as detailed in the report.
Moreover, the growing demand for residential properties in tier-2 and tier-3 cities is poised to drive further construction activities. Non-farm employment is on the rise, which is relieving pressure on the agricultural labor force. The manufacturing sector is anticipated to witness a surge in employment, fueled by the expansion of enterprises and the emergence of sunrise sectors, thereby contributing to the creation of quality jobs.
India's inflation outlook remains favorable, with core inflation showing a downward trend, signaling a widespread moderation in price pressures. Additionally, the anticipated increase in summer sowing is expected to alleviate food prices, according to the report.
Externally, the narrowing merchandise trade deficit and increasing net services receipts are anticipated to bolster the current account balance in the fiscal year 2024. However, vigilance is warranted for FY25 regarding the current account deficit. The report emphasizes the necessity of boosting domestic household savings to facilitate private sector capital formation in the economy.
The confidence of global investors in India is on the rise, reflecting in increased foreign portfolio investment flows. The forthcoming inclusion of India in Bloomberg's bond index from January 2025 is anticipated to further bolster inflows, supported by the government's demonstrated fiscal prudence over the years. The report underscores that bond investors will evaluate their decisions based on the sustainability of such fiscal measures. Overall, India is poised optimistically for the onset of FY25, as per the report's assessment.
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