NEW DELHI: The finance ministry believes the spillover effect of the global slowdown is going to hit India’s exports, though it feels that a resilient domestic demand, a re-invigorated investment cycle along with strengthened financial system and structural reforms will provide impetus to economic growth, going forward.
In its monthly economic report, the finance ministry warns of an impending global recession due to a rapid deterioration in global growth prospects, high inflation, and worsening financial conditions. It also sees a future risk in the fact that monetary tightening in the US has not yet resulted in a significant tightening of financial conditions in that country. It, therefore, says when that (financial tightening) happens, global financial conditions will tighten.
The report, however, predicts a softening of inflationary pressures going forward. “Easing international commodity prices and new Kharif arrival are set to dampen inflationary pressures in the coming months,” says the report. The retail inflation fell below 7% in October to 6.77%. Retail inflation in September was 7.44% and 7.01% in August.
The report elaborated on the reason for high food prices in recent past, and the government’s efforts to keep food prices in check. “India’s food system has also been adversely impacted by the (Russia-Ukraine) conflict and vagaries of nature. Domestic prices of some food items have risen in the wake of the rise in international prices,” the report said.