The finance ministry’s report does still emphasise the need to monitor external financial flows closely, recognising their direct impact on the rupee’s value and the balance of payments.
Despite India’s merchandise trade deficit reaching a record high of $31.46 billion in October, economists anticipate a moderation in the gap, expressing minimal concern about its impact on the country’s current account dynamics.
Addressing potential risks, the report highlights that a fuller monetary policy transmission may temper domestic demand. However, it remains optimistic about India’s growth prospects, anticipating a positive outcome in FY24 compared to other major economies.
Sustained focus on public investment in infrastructure and advancements in digital public infrastructure are cited as factors contributing to India’s potentially longer economic and financial cycle.
The finance ministry report also reiterates that the Indian economy has demonstrated remarkable resilience amid a global slowdown, and that this has been driven by a robust domestic demand.
The Indian government and the RBI expect a GDP growth rate of 6.5 per cent at the close of 2023–24, although market expectations hover around 6 per cent. The report suggests that the July–September quarter’s GDP growth may surpass the RBI’s forecast, providing further evidence of India’s economic resilience. Data for this quarter is to be released on 30 November.