Bright growth prospects driving high imports, financing them a top priority: Finance Ministry
The Hindu
Economy poised to grow 7.2% even if next 3 quarters clock just 5.4% average growth, says Finance Ministry
India’s growth has been robust and inflation in control, even as the world’s major economies are afflicted by slowing growth and high inflation, the Finance Ministry said on Saturday, reckoning that the economy will grow 7.2% this year driven by a revival in consumption, employment and investments.
Financing India’s imports, which have been over $60 billion for six straight months, will have to be accorded high priority, the Ministry noted, linking the ‘faster growth’ in imports is to the country’s ‘bright’ growth prospects.
“The increase in price of imported commodities not only led to uptick in headline inflation but also widened the trade balance. However, with the easing of global supply-chain disruptions and decline in commodity prices, inflationary pressures are expected to soften and trade balance is anticipated to improve,” the Ministry said in its monthly economic review for August.
The monthly goods trade deficit hit a record $30 billion in July as exports growth slowed, and remained uncomfortably high at about $28 billion in August. Indian consumers have faced 6%-plus inflation since January this year, with four of the last five months clocking 7% or more.
The Finance Ministry attributed the ‘inflation acceleration in 2022 compared to 2021’ to rising prices of imported commodities, global supply side disruptions and revival of demand in advanced economies with the waning of the pandemic.
“A relatively buoyant growth and a relatively stronger external sector is now set to converge with declining inflation to deliver for India a strengthened macroeconomic outlook for the balance period of the current year,” it said.
“Downside risks to growth will persist insofar as India is integrated with the rest of the world. Nor is there room for complacency on the inflation front as lower crops-sowing for the Kharif season calls for deft management of stocks of agricultural commodities and market prices without unduly jeopardising farm exports,” the Ministry said