 Though geo-political tension triggered by the conflict between Russia and Ukraine have not ceased and the economic fallout of the crisis is only gradually unfolding in the form of global food shortages and rising Brent crude oil prices, "the government is exploring all viable options like import diversification to procure crude oil at affordable prices".
In the economic review for the month of March 2022, released by the Finance Ministry on Thursday, it has been mentioned that to offset the consequences of geopolitical conflicts, GatiShakti and production linked incentives schemes will drive investment, which will deliver high-post-recovery growth for the Indian economy.
"Geopolitical conflicts and their consequent impact on food, fertiliser and crude oil prices cast a cloud on the growth outlook globally. India may feel its impact although the magnitude will, of course, depend on how long the dislocations in energy and food markets persist in the financial year and how resilient India's economy is to mitigate the impact. Transient shocks may not have a big effect on real growth and inflation," it said.
"Offsetting these potential headwinds, GatiShakti and Production Linked Incentive Schemes will drive investment, which will combine with supply chains strengthened by structural reforms taken in the past few years to deliver high-post-recovery growth for the Indian economy," the monthly review report noted.
Referring to rising Brent crude prices, which have long breached the $100 per barrel mark, the review said that "Affordability is desired as even the present level of international crude price, should it persist for a long time, may come in the way of India achieving a real economic growth rate north of 8 per cent in FY23. Be that as it may, India's economy, having swiftly recovered in 2021-22, after the pandemic induced contraction, may prove resilient owing to government's thrust on capital expenditure and improved corporate sector's financial health"
Underlining the fact that the strength of Indian economy can withstand all pressures, the monthly report for March highlighted several positive developments during the period, which reflect India's economic recovery.
"For the present though, the economy is benefiting from continued growth momentum in the agriculture sector with the first advance estimates of production of horticulture crops for 2021-22 indicating an increase in area sown for both fruits and vegetables over 2020-21. In addition, constant increase in acreage under summer crops, crop diversification and increase in procurement during ongoing Kharif Market Season (KMS) 2021-22, will boost income levels in the rural economy," it noted.
Industry has also been showing robust growth, particularly in the second half of 2021-22. The combined Index of Eight Core Industries registered a YoY growth of 5.8 per cent in February 2022, highest in the last four months following an increase in output of natural gas, coal, refinery products among others, the report said.
"PMI Services has also stayed in the expansionary zone continuously for eight months on the back of E-toll collection, E-Way Bill, Railway freight and Air Cargo, among others, complementing the robust manufacturing sector. Resultantly, GST collections breached Rs.1.4 lakh crore in March, 2022 heralding the onset of post-recovery growth," it added further. |
