“The prediction of a normal Southwest Monsoon also augers well for food production and easing of price pressures. With the assumption of normal monsoon, the RBI forecasts a 4.9% retail inflation for FY25’s first quarter,” the FinMin said.
In its review, the Finance Ministry also reiterated its faith in India’s ability to deal with adverse pressures from geopolitical tensions, while continuing to make progress on its growth numbers.
“The positive indications in the farm sector should help India firewall against any adverse pressures that may arise from geopolitical tensions and global commodity prices,” the review from the Finance Ministry added.
April’s report also addressed concerns about debt sustainability, with the report saying “robust trends in the capital spending of the general government during April-February of FY24” have “laid to rest concerns about debt sustainability.”
“Likewise, the strong macro-economic buffers of India should help the real sectors of the economy navigate the external headwinds smoothly and continue the growth momentum of the previous year,” the report adds. Amid a poll battle on unemployment, the BJP government’s monthly review termed job trends “reassuring,” saying that, “while the urban unemployment rate declined y-o-y during the quarter ending March 2024, the labour force participation rate and worker-topopulation ratio have improved.”The Finance Ministry’s review for April also talked of India’s inflation trajectory, saying that it would be influenced by several factors, including government initiatives, open market sales, monitoring of stocks, import of pulses, and export restrictions.
Friday’s report also cautioned of “ongoing geopolitical tensions” that “could potentially driveup international commodity prices and disrupt supply chains.”
Addressing India’s currency performance, the report said foreign exchange reserves are comfortable, calling the Indian rupee “one of the most resilient vis-à-vis the US dollar in recent months.”
The Finance Ministry’s statement comes even as the Indian rupee strengthened by the most in five months, as the country’s key equities gauges hit a record high and amid a larger-than-expected dividend payout to the government.
On Friday, the rupee rose as much as 0.3% to 83.03 against the dollar, the most since December 15, as markets reopened after being shut on Thursday.
Content Source: economictimes.indiatimes.com