The Finance Ministry’s latest monthly economic review, released on Friday, paints a positive picture of the Indian economy as it approaches the end of the current financial year. Strong growth, stable inflation, and improving employment prospects are cited as key factors contributing to India’s resilience amid global uncertainties.
Despite challenges such as potential increases in crude oil prices and global supply chain disruptions, the review underscores India’s “bright outlook” for the financial year 2024-25. The report highlights robust investment activity driving growth, with a steady rise in consumption and continued focus on public investment catalyzing private investment.
Foreign direct investment (FDI) inflows, though yet to gain momentum, are expected to receive a boost with the inclusion of Indian bonds in the Bloomberg bond index starting January 2025. Moreover, foreign portfolio investors turned net buyers in February, signaling confidence in India’s economic prospects.
The review emphasizes the importance of increasing domestic household savings to finance private sector capital formation. It also notes the positive trend in demand for residential properties in tier-2 and tier-3 cities, which bodes well for construction activity. Non-farm employment has seen a revival, indicating a shift away from agriculture and towards sectors like manufacturing.
The government’s focus on infrastructure extends beyond physical projects to the technological landscape, with the approval of the “India AI Mission” aimed at catalyzing artificial intelligence innovation. This initiative, supported by a substantial budget outlay, seeks to build computing infrastructure, develop indigenous AI capabilities, and foster AI start-ups through public-private partnerships.
India’s economic performance, with growth exceeding 8% for three consecutive quarters, has reaffirmed its status as a standout performer amidst sluggish global trends. Core inflation is on a downward trajectory, indicating easing price pressures, while increased summer sowing is expected to alleviate food prices.
Despite global headwinds, the Finance Ministry remains optimistic about India’s economic trajectory, citing supportive factors and ongoing government initiatives aimed at driving sustainable growth and innovation.
