The ministry said in its monthly economic review that the key figures (exports, GST collections, PMI etc.) in the October-December quarter of the current financial year generally indicate a slowdown. One reason for this is the tightening of monetary policy, which has started showing adverse effects on global demand.
The Finance Ministry said that the announcement of measures to increase capital expenditure, promote green economy and strengthen the financial market in the budget for the financial year 2023-24 is expected to accelerate economic growth along with increasing jobs. The ministry said in its monthly economic review that the key figures (exports, GST collections, PMI etc.) in the October-December quarter of the current financial year generally indicate a slowdown. One reason for this is the tightening of monetary policy, which has started showing adverse effects on global demand.
It said, “This situation may continue in 2023 as various agencies have predicted a decline in global growth.” In addition to the effect of monetary policy tightening, the impact of the pandemic in some countries and tensions in Europe could have an adverse impact on global growth.
The International Monetary Fund and the World Bank have predicted India to continue to be the fastest growing economy in 2023 even as global output is projected to slow down.
The monthly review states, “Like the financial year 2022-23, India is ready to face the coming financial year with full confidence. The reason for this is overall overall macroeconomic stability. Along with this, the country is also fully alert about the political and economic risks at the global level.
It has been said that in the economic review of the financial year 2022-23 presented in the Parliament, the economic growth rate in 2023-24 has been estimated to be 6.5 percent. There is more risk of going down than going up.
According to the ministry’s report, “Inflation risks for the country are expected to remain low in 2023-24.” But it has not completely ended due to the ongoing global tension due to the Russia-Ukraine war and the global situation due to which supply disruptions have taken place. Due to this, there was a high inflation rate in 2022 and this situation still exists.
El Niño has been predicted in the Pacific region. Due to this, the monsoon in India can remain weak. This would result in less production and higher prices. On the other hand, the situation on external deficit including current account deficit with prices may be less challenging in FY 2023-24 as compared to the current fiscal. But there is a need to keep an eye on the trends in international trade and capital flows.
In the budget of the financial year 2023-24, once again an attempt has been made to speed up the growth through capital expenditure. The capital expenditure of the Center in the budget is Rs 10 lakh crore, which is 33 percent more than the current financial year.
It said, “Through this, the government continues its efforts to accelerate growth through investment amid adverse global conditions…In the Union Budget for the financial year 2023-24, increase in capital expenditure, basic Measures such as emphasis on infrastructure development, promotion of green economy and initiatives to strengthen financial markets are expected to boost job creation and accelerate economic growth.
Apart from this, measures to increase spending and consumer demand have also been announced in the budget. These include rationalizing tax slabs and increasing the basic income tax exemption limit from Rs 2.5 lakh to Rs 3 lakh under the new personal income tax regime (NPITR).
The measures announced for the MSME (Micro, Small and Medium Enterprises) sector will bring down the cost of funds and help small enterprises. The revision in tax slabs under the new personal income tax regime is expected to boost consumption. This will give more momentum to the economic growth.
According to the report, easier KYC (Know Your Customer) norms, expansion of DigiLocker services and measures to promote digitization are expected to strengthen financial markets.
It states, “The government has emphasized on macro-economic stability in the last few years. With this, the Indian economy is fully prepared to move ahead with confidence in the new financial year by adopting a cautious approach towards risks.
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