The finance ministry in its report has said that there are downside risks to growth and upside risks to inflation, partly channelled through the external sector and partially originating from weather uncertainties. It said consumption has shown steady and broad-based growth, while investment in capacity creation and real estate is finding traction.
Observing that the FY24 for the Indian economy opened on the back of strong activity witnessed in the last quarter of the previous fiscal, the report said GST collections in April, which marked the commercial activity of the last month, underwent a level shift pushed up by the widening of the tax base and heightened economic activity. Index of Industrial Production (IIP) and Eight Core Industries Index (ECI) averaged steady growth in Q4 of FY23, adding to the capacity utilization hovering close to 75 percent two quarters earlier. Buoyed by sustainable growth in activity and increasing capacity utilization, it said the corporates have started investing in new capacity, adding that the production of capital goods and construction/infrastructure goods, as estimated in the IIP, grew steadily in Q4 of FY23, along with imports of capital goods.
Like the manufacturing and services sector, it said the prospects for the agriculture sector also appear to be bright. The forecast of a normal monsoon, surplus water reservoir levels, adequate availability of seeds and fertilizers, and robust tractor sales augurs well for a healthy kharif sowing season starting in June 2023. It noted that despite unseasonal rains, smooth public procurement of wheat augers well for food security, and rural demand is also gaining momentum, as evident in sturdy sales of fast-moving consumer goods (FMCG) companies during Q4 of FY23 and sustained double-digit growth of two-three-wheelers sales in April. Going forward, it said, healthy prospects for the kharif season, higher minimum support prices (MSP) for crops, and increased budgetary spending by the government are likely to enhance farmers’ income and boost the rural economy.
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