The global economic landscape is seeing a gradual resurgence, with fading fears of recession and rebounding growth in major economies, it said. But regional disparities in terms of the pace of growth still exist.
India continues to exhibit a robust economic performance, despite global uncertainties, due to factors such as strong domestic demand, robust investment and sustained manufacturing momentum, the ministry said.
“Despite the global challenges, India stands out with its strong economic performance, highlighting broad-based growth across sectors and asserting its pivotal role in supporting the global growth trajectory,” said the report. India is the world’s fastest-growing major economy.
Monsoon breather
The report said the forecast of above-normal rain in the June-September monsoon bodes well for a good harvest, easing inflation concerns. Food inflation, which has remained sticky, could moderate, as plentiful rain will likely lead to higher production, assuming good spatial and temporal distribution, it added.
Price pressure continued to abate in FY24 with retail inflation hitting 5.4%, the lowest since the pandemic and down from 6.7% in FY23.
The report also noted the record-breaking stock market performance in March, robust goods and services tax (GST) collections and substantial growth in the manufacturing and services sectors, reflecting a buoyant domestic economic landscape.
External sector
The report said slowing global trade, as suggested by the United Nations Conference on Trade and Development (UNCTAD), presents a challenge for economies worldwide. However, India’s trade deficit will likely ease in the coming years as the production-linked incentive (PLI) schemes are extended to more sectors, the report said. It cited forecasts by the central bank and global agencies that reckon the country’s current account deficit may have dropped below 1% in FY24.
Moreover, trade pacts like the India-EFTA Trade and Economic Partnership Agreement (TEPA) signed last month “signal India’s commitment to expanding its global trade footprint,” the report said.
The external debt-to-GDP ratio also eased, albeit marginally, to 18.7% at the end of December 2023 from 18.8% at the end of September 2023.
The share of short-term debt, with an original maturity of up to one year, in total external debt moderated to 19.5% at the end of December 2023 from 20.3% in the previous quarter.
