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The review stated that while inflationary pressures have re-emerged, “the price pressure in food items is expected to be transitory, as evident in the steady performance of the agriculture sector, along with fresh arrivals in the market”.
The government’s continued emphasis on capital expenditure is expected to drive growth in the coming years, the finance ministry said in its monthly economic review for the month of July.
“Enhanced provision for capital expenditure by the government is now leading to the crowding in of private investment, as evident in the performance of various high-frequency indicators and industry reports which highlight the emergence of the green shoots of a private capex upcycle.”
The Union government, in the financial year 2024 (FY24) Budget, increased the capital outlay by 33.3 per cent, raising the share of capital expenditure in total expenditure from 12.3 per cent in FY18 to 22.4 per cent in FY24 Budget estimates.
The finance ministry also said that the external sector requires closer monitoring to strengthen merchandise export growth in the face of slowing global demand. It mentioned that persistent geopolitical concerns continue to overshadow world trade growth, which is expected to decline to 2 per cent in 2023 from 5.2 per cent in 2022.
“Services exports continue to do well and are likely to continue doing so as the preference for remote working remains unabated, typically manifested in the proliferation of Global Capability Centres.”
Domestic consumption and investment demand are expected to continue driving growth, the review said. “Going forward, increased minimum support prices and prospects of healthy kharif crops will further add strength to the rural demand,” it added.
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