In a world of uncertainties, India is one of the very few standout performers, Union Finance Minister Nirmala Sitharaman said on Friday, a day after the International Monetary Fund described the country as a bright spot in a global economy which is facing an imminent recession.
Sitharaman was addressing the International Monetary Finance Committee during the ongoing annual meeting of the World Bank and the IMF.
“In a world of uncertainties, India is one of the very few standout performers,” the minister said.
She said India’s National Statistical Organisation (NSO) has now placed the GDP growth for Q1 of the current financial year 2022-23 at 13.5 per cent on a year-on-year basis the highest among the large economies.
Sitharaman said this was achieved despite the fact that India started the monetary normalisation process quite early: surplus liquidity is being absorbed with the Standing Deposit Facility instituted in April 2022 and interest rate hikes from May this year.
The central government, she noted, is on a consolidation path and has budgeted to prune the GFD-GDP ratio to 6.4 per cent from 6.7 per cent in 2021-22 and 9.2 per cent in 2020-21.
Further, government expenditure is now tilted towards capital rather than revenue, strengthening the foundations for medium-term growth, she added.
According to Sitharaman, touching 13.5 per cent GDP growth in Q1 enabled India to cross the pre-pandemic level by 3.8 per cent. India has completely withdrawn from lockdowns since April 2022.
“So, we see consumer spending picking up at 26 per cent in Q1. This is made possible by bolstering of consumer confidence and revival of contact intensive activities. But still, there’s scope for improvement as the key trade, hotel, restaurant GVA is yet to cross the pre-pandemic level,” Sitharaman said.
On the investment side, she said, gross fixed capital formation (GFCF) growth shot up to 20 per cent in Q1, driven largely by governments and public sector undertakings (PSUs) in the transport sector as also by housing, construction, steel, pharma and IT in the private sector.
This growth is also reflected in proximate indicators — cement, steel, IIP capital goods, non-gold and non-oil imports, and capacity utilisation.
“Both exports and imports are growing at double digits but import growth is more robust than that of exports, reflecting the revival of the domestic economy and the divergent slowdown in the global economy,” Sitharaman said.
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