Finance Ministry upbeat over India's fiscal outlook amid rising private investment

FinMin economic outlook: Finance Ministry has expressed optimism regarding the country's economic outlook for the upcoming fiscal year, citing an uptick in private investment and a downward trend in inflation.

The Monthly Economic Review highlighted the positive impact expected from the inclusion of Indian bonds in the Bloomberg bond index starting January 2025, which is expected to bolster capital inflows into the country.

According to the review, robust investment activity is driving growth, accompanied by a steady increase in consumption. The Department of Economic Affairs noted that the continued emphasis on public investment has contributed to attracting private investment, as indicated in the February edition of the review.

Revised estimates from the National Statistical Office (NSO) have raised the GDP growth forecast for the current fiscal year to 7.6 per cent from the earlier projection of 7.3 per cent. India has consistently achieved growth rates above 8 per cent for three consecutive quarters, reaffirming its status as a standout performer amid sluggish global growth trends.

Furthermore, various agencies have revised their growth estimates for India's fiscal year 2024 closer to 8 per cent, reflecting a positive sentiment, as highlighted by the ministry.

The review also noted increased demand for residential properties in tier-2 and tier-3 cities, which bodes well for the construction sector's future activity. Additionally, non-farm employment has seen a revival, indicating improved capacity to absorb labour transitioning from agriculture.

The manufacturing sector is expected to witness growth in employment, driven by the upscaling of enterprises and the emergence of sunrise sectors as catalysts for generating quality jobs.

Despite potential challenges such as rising crude oil prices and global supply chain bottlenecks, the ministry remains optimistic about country's economic prospects for the fiscal year 2025.

The review focused on a positive inflation outlook for the upcoming months, with core inflation trending downwards, signalling a broad-based moderation in price pressures. Additionally, the anticipated increase in summer sowing is expected to alleviate food prices, further contributing to the positive inflation outlook.

(With PTI inputs)