The finance ministry’s monthly economic report for July has maintained a positive stance on the economy, keeping the growth forecast at 6.5-7 per cent for the current financial year (2024-25/FY25). This projection aligns with the Economic Survey for 2023-24, indicating a steady outlook for the Indian economy. Despite cautious consumer confidence and industrial outlook surveys conducted by the Reserve Bank of India, the finance ministry remains optimistic about the future trends.
The report highlighted a decline in both consumer and industrial sentiment, with lower optimism about the general economic situation, employment, and prices. However, it emphasized the need to monitor these trends for future developments. The finance ministry expects capital expenditure (capex) and total expenditure to increase in the coming months after a period of lower spending in Q1FY25 due to the general election. This increase in spending is crucial for supporting the private investment cycle and driving economic growth.
On the fiscal front, the Union Budget FY25 has outlined a glide path of fiscal consolidation, supported by strong revenue collection and disciplined expenditure. The fiscal deficit is projected to decline, reflecting a sound economic performance. The report also noted significant milestones in July 2024, such as growth in goods and services tax collections and a rise in economic activity indicated by e-way bill generation and stock market indices reaching record highs.
Despite challenges like an erratic monsoon, the report stated that India’s economic momentum remains intact. Reservoirs have been replenished, supporting agricultural activities like kharif sowing. Inflation is moderating, with retail inflation decreasing to 3.5 per cent in July 2024, driven by a moderation in food inflation. The steady progress in the southwest monsoon has further bolstered agricultural prospects.
In conclusion, the finance ministry’s economic report paints a positive picture of India’s economic outlook. With expectations of increased capital expenditure, fiscal consolidation, and resilient economic activity, the country is poised for continued growth. The steady progress in various economic indicators and the moderation of inflation indicate a stable and promising future for the Indian economy.