The government is expecting an easing of food prices with the prediction of an above-normal monsoon in 2024, the Finance Ministry’s monthly economic report for March said on Thursday. The report also said that going forward, robust foreign inflows and comfortable trade deficits are expected to keep the rupee within a comfortable range.
“Further easing of food prices is on the anvil as the India Meteorological Department has predicted above-normal rainfall during the monsoon season, which is likely to lead to higher production, assuming good spatial and temporal distribution of the rainfall,” the monthly report released by the Department of Economic Affairs said.
The Finance Ministry said that retail inflation in financial year 2023-24 witnessed a significant decline, reaching its lowest level since the COVID-19 pandemic. Food inflation declined from 8.7 per cent in February to 8.5 per cent in March.
The Reserve Bank of India in its State of the Economy report on Wednesday, however, cautioned that while retail inflation was in sight of hitting the 4 per cent target, extreme weather events, a spike in crude oil prices due to geopolitical uncertainty posed an inflation risk.
The monthly report highlighted that 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.
“India continues to be the fastest-growing major economy with positive assessments of the growth outlook for the current financial year, by international organisations and the Reserve Bank of India,” the report said.
The Finance Ministry’s report said that leading indicators suggest an overall upturn in economic activity driven by expansion in both the manufacturing and service sectors. “Geopolitical tensions remain a concern, but notwithstanding recent developments, risk perceptions have softened, offering a potential upside for growth.”
The Finance Ministry is expecting the trade deficit to decline in the coming years with the increased coverage of the Production Linked Incentive Scheme across various sectors, even though slowing global trade presents a challenging landscape for economies worldwide.
The report noted that electronic goods have emerged as a standout sector in the country’s export basket amid a slowdown in global trade.
Electronics goods exports, the monthly report said, accounted for 6.7 per cent of India’s total exports in financial year 2023-24, increasing from $23.6 billion in financial year 2022-23 to $29.1 billion in financial year 2023-24.
The monthly review added that strategic trade agreements like the India-European Free Trade Association Trade and Economic Partnership Agreement (TEPA) signal India’s commitment to expanding its global trade footprint and leveraging international partnerships for sustained economic growth.
First Published: Apr 25 2024 | 4:45 PM IST
