The Ministry adds that there are “substantial multi-frontal challenges” to the economy because of international tensions and unstable global commodity prices, but early signs point to a continuation of growth momentum.
International conflicts and unstable global commodity prices, particularly for petroleum products, are “substantial multi-frontal challenges” to the economy. But the ministry additionally points out that signs of a normal monsoon and the farm sector’s resiliency should “firewall” India against these unfavourable pressures, as well as help ease food prices and inflation at the retail level.
Food inflation touched its highest level in four months in April, at 8.7%, while retail inflation fell to an 11-month low of 4.83%. The ministry said a number of factors, such as the approaching rabi harvest, which should lower the price of wheat and chana, and the coming normal monsoon, which will boost food production, will influence the course of inflation in the future.
The ministry said in its economic review for April that “early indicators suggest a continuation of the momentum” in the first quarters of this year, with macroeconomic metrics like employment, price stability, and finances improving in a “mutually reinforcing” manner. The ministry stated that the economy closed 2023–24 “strongly,” with growth “surpassing market expectations.”
In addition to increased productivity in agriculture, the ministry highlighted the role of “macro-economic buffers fostered and strengthened during the post-COVID management of the economy” in allowing the economy to “reasonably smoothly” navigate international tensions and unstable global commodity prices.
The review indicates that investment activity is still strong, with both a recovery in rural demand and an ongoing rise in urban demand driving consumption. Regarding the trends from January to March of this year, the ministry stated that “demand growth for rural consumer goods that move quickly outpaced urban growth for the first time in five quarters.”
The ministry stated that strong domestic demand and “partially tentative external demand” were reasons why the industrial and service sectors were doing well. It also forecasts that manufacturing in the country will likely receive additional outside support in the coming months and that merchandise exports will be “optimistic.”
In April, India’s exports benefited from slightly improved economic growth and consumer confidence in Europe, as well as a stable U.S. economy. According to reports, a growing number of organisations in the United States and Europe are focusing on reindustrialization. Most of these organisations have focused on improving the resilience of their supply networks. This might assist India’s manufacturing companies as part of the China Plus One strategy, according to the ministry.
By Ashiya Qureshi