“Impact of geopolitical tensions on food, fertilizer and crude oil prices weighs on growth prospects”
“Impact of geopolitical tensions on food, fertilizer and crude oil prices weighs on growth prospects”
According to a Finance Ministry report, Gatishakti and the Production-Linked Incentive Schemes (PLI) will offset global headwinds and boost investment, leading to high growth in India’s economy post-recovery.
Geopolitical conflicts and their resulting impact on food, fertilizer and crude oil prices are clouding global growth prospects, according to the monthly economic report produced by the ministry.
India could feel its impact, although of course the extent will depend on how long the dislocations in energy and food markets last in the fiscal year and how resilient India’s economy is to mitigate the impact, the ministry pointed out, adding that temporary Shocks that occur might not have a major impact on real growth and inflation.
“GatiShakti and Production Linked Incentive Schemes will offset these potential headwinds and boost investments that will connect to supply chains strengthened by structural reforms over the past few years to bring India’s economy high post-recovery growth,” it said.
With increasing signs of improving labor force participation and falling unemployment, and the government’s steadfast commitment to continue to support the economically poor (Prime Minister Gharib Kalyan Yojana has been extended for a further six months until the end of September 2022), the growth path ahead would likely be a broader, it was said.
PMI Services has also remained in the expansion zone for eight consecutive months due to the collection of e-toll, e-waybill, rail freight and air freight, among others, complementing the robust manufacturing sector, the ministry noted.
GST surveys surpassed the £1.4 billion mark in March, heralding the start of post-recovery growth, it said, adding that elevated PMI services also reflect growth in contact-based services as states Gradually easing amid pandemic-related restrictions India’s COVID-19 immunization coverage is growing faster than the fall in new infection cases.
Against this background, private consumption could gradually pick up. UPI transaction values and volumes more than doubled in FY22, with the volume of UPI transactions in March surpassing 5 billion for the first time in a month, the ministry said.
With central government capital investment for the period April 2021 to February 2022 exceeding levels in the corresponding periods of the pandemic and pre-pandemic years, there are early signs that rising public investment may be pushing private investment as well.
In a big vote of confidence in the attractiveness of India’s economy as a major foreign investment destination, gross FDI inflows into the economy rose to US$69.7 billion in April-January FY22, the ministry said in the report.
Investments funded by external commercial borrowings (ECBs) continue to thrive, posting 29.7% year-on-year growth in April-February FY22, she noted.
Growing foreign direct investment and other capital inflows have ensured a comfortable position of foreign exchange reserves with import coverage for more than 12 months, it said.
The ministry further said that a broad-based economic recovery has also boosted job opportunity growth, reflected in net EPF subscribers, which reached 15.3 lakh in January 2022, up 37.4% year-on-year.
