The Finance Ministry declared on Monday a strong likelihood that the Indian economy is poised to achieve a growth rate of 7 percent or more for the fiscal year 2024. Projections extend optimistically into the fiscal year 2025, with expectations of another year of robust 7 percent real growth. If these forecasts for FY25 materialize, it will signify the fourth consecutive year post-pandemic where the Indian economy has sustained growth at or above 7 percent. This achievement speaks volumes about the resilience and potential inherent in the Indian economy, according to the Finance Ministry.
Recognizing the nuanced nature of economic growth, some economists argue that not all growth is created equal, and the Finance Ministry acknowledges the merit in this perspective. While achieving 8-9 percent growth when the global economy is expanding at 4 percent is one scenario, sustaining growth at or above 7 percent when the world economy is grappling with a 2 percent growth rate presents a qualitatively superior accomplishment.
In a pre-Interim Budget review just days ahead of the scheduled release on February 1, the Finance Ministry stated, "One unit of growth in the latter circumstance is qualitatively superior to the former." Emphasizing the concept of marginal utility in this context, the Ministry highlighted that the global economy is facing challenges in maintaining its recovery post-Covid due to successive shocks, including the resurgence of supply chain disruptions in 2024. If these disruptions persist, they could impact global trade flows, transportation costs, economic output, and inflation on a worldwide scale.
The Finance Ministry expressed confidence that India, having successfully navigated the challenges posed by Covid and the energy and commodity price shocks of 2022, is well-prepared to weather the emerging disturbances. While acknowledging that India won't be immune to the global challenges, the review suggests a quiet confidence in India's ability to confront and overcome these disruptions.
It's essential to note that this analysis is distinct from the Economic Survey prepared by the Department of Economic Affairs, which is slated to be released before the full Budget following the general elections.
(With Agency Inputs)
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