global adversity There remains a downside risk to India’s economic growth as crude oil and edible oil, which has driven inflation in India, remain the major imported components in the consumption basket. Currently, however, their global prices have softened, as feared recession The Finance Ministry said on Thursday that there has been some reduction in prices.
“The recent fall in international prices of food items, industrial metals and even crude oil is a welcome development for India’s inflation control. The recent revenue generation measures announced by the government will not only help in curbing the increase in current account deficit, but will also ensure that fiscal slippage, if any, is well contained,” the ministry said in a report in June. Monthly Economy Review for.
It added that the depreciating rupee, apart from increasing global commodity prices, has also made price-inefficient imports costlier, making CAD (current account deficit) more difficult to reduce. To meet the financial needs of rising CAD and rising FPI outflows, foreign exchange reserves have declined by $34 billion in the six months since January 2022.
“The Indian rupee has depreciated by 6 per cent against the US dollar since January 2022, due to the increase in the CAD. The rupee has performed well in 2022 as compared to 2013, where it is vis–vis other major economies. is weak, thus indicating the strong infrastructure of the Indian economy,” the ministry said.
The report said that global trade slowed in Q1 2022-23 compared to Q4 2021-22, mainly impacted by disruptions in supply chains, broad-based inflationary pressures, increased uncertainty and a resultant slowdown in global growth. Due to which India’s exports decreased. In the current quarter (Q1 2022-23) as compared to the previous quarter (Q4 2021-22).
Scarcity, unprecedented rise in commodity prices, and an increase in the US dollar driven by monetary tightening mean rising import bills for net import-dependent countries like India. Consequently, due to faster growth in imports than exports, the trade deficit widened in Q1 2022-23 from the previous quarter, it said.
The report also said, “Economic activity is better than expected despite the current geopolitical tensions; Interest rate hike in US and India India and increased prices of crude oil and some other commodities. The services sector continues to improve and manufacturing capacity remains stable. There is a clear willingness to invest from the private sector. Banks are ready to lend and their financial position, as shown by the pressure test of the central bank, is quite strong. Faster monthly GST receipts confirm the momentum in economic activity.
It said that on the margins, the first 10 days of June and July were better for the Indian macro as compared to the first two months of the current fiscal. “It is some cause for relief and also cautious optimism in these times.”
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