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India’s Finance Ministry Says About Possibility of 7% Economic Growth in Coming Years

The Ministry of Finance of India believes that in the next fiscal year, the economy of this country is likely to show growth of 7%.

India's Finance Ministry Says About Possibility of 7% Economic Growth in Coming Years

Also, the mentioned ministry evaluates as a realistic scenario the exceeding of the specified rates of the dynamic of the economic system in the coming years. This forecast is based on factors such as a strong financial sector and business reforms.

The specified growth expectations for the fiscal year starting in April are in line with the estimates publicly announced by the governor of the central bank of India Shaktikanta Das at the World Economic Forum in Davos, Switzerland. Also, the forecast of the Ministry of Finance is more optimistic than the opinion of analysts, who assume that the economy of the South Asian country will demonstrate a positive dynamic at the level of 6.3%.

Shaktikanta Das in Davos also said that in the new fiscal year, inflation in India will average about 4.5%. Reasoning in the context of the forecast of economic growth, he stated that his vision of the future dynamic is based on a strong momentum of corresponding activity in the South Asian country. The corresponding statement was made within the framework of an event organized by the Confederation of Indian Industry. Shaktikanta Das says that the South Asian country’s economic system is ready for long-term growth.

In the context of thinking about inflation, the head of the central bank of India said that in this case, food prices, the future dynamic of which is still not understood, will become a significant factor of influence. He warned that recurring the cost of the specified category of goods could weaken inflation expectations and provoke general price pressure in the economy.

Shaktikanta Das is convinced that monetary policy in India should continue to remain actively disinflationary. In his opinion, appropriate measures are necessary to direct the growth in the cost of goods and services to an indicator of 4% on a long-term basis.

The Reserve Bank of India has left interest rates unchanged for five consecutive meetings. Economists predict that the financial regulator will begin to ease monetary policy in 2024 against the background of similar actions by the Federal Reserve System.

Shaktikanta Das in Davos also stated that the rupee remains a freely floating currency and is determined by the market. Separately, he noted that the relative stability of the national currency is the result of strengthening the Indian economy and improving the external position of the state.

The monthly economic review of the Ministry of Finance of the South Asian country, released on Monday, January 29, draws attention that one of the components of economic growth shortly may be future structural reforms in the state. The ministry’s experts said that the only concern is the high level of risk of geopolitical conflicts.

The priorities of the specified structural reforms are education, energy security, healthcare, improving gender balance in the labor market, and reducing the burden of compliance for small businesses. The relevant information is contained in the economic review of the Ministry of Finance, published on Monday.

The Government of India predicts that economic growth for the current fiscal year will be 7.3%. This indicator makes the South Asian country one of the fastest-growing large economies in the world.

Over the past three years, India has recorded an annual increase in capital expenditures by almost a third. In this case, priority was given to spending on roads, power plants, and ports. At the same time, India has developed a strong banking system and healthy household savings, which are a kind of platform for economic growth.

Higher growth rates may push New Delhi to aim for the economy to reach $7 trillion by 2030, compared with $3.7 trillion today.

As we have reported earlier, India Central Bank Tightens Rules for Financing of Alternative Investment Funds.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.