‘Economic outlook remains bright in current fiscal’

India’s economic outlook for 2023-24 remains bright as economic activity maintained its momentum in August, according to a finance ministry document. The monthly economic review released by the finance ministry on Friday stated that the monsoon deficit of August has been partially plugged in September and that is good news. “It is heartening that rains in September have erased a portion of the rainfall deficit at the end of August. A stock market correction, in the wake of an overdue global stock market correction, is an ever-present risk. Offsetting these risks are the bright spots of corporate profitability, private sector capital formation, bank credit growth and activity in the construction sector. In sum, we remain comfortable with our 6.5 per cent real GDP growth estimate for FY24 with symmetric risks,” the review said. Prices of selected food items that drove the inflation rate above 7 per cent in July are on the retreat, it added. “Private sector is in good health as data on advance tax payments for second quarter confirm. They are investing. Recent run-up in oil prices is an emerging concern. But, no alarms yet,” the review noted. Though it noted that the risks of a stock market correction and geopolitical developments could potentially hurt investment sentiment in the second half of the financial year, however the impact of these developments on underlying economic activity in India should be relatively contained. Therefore, in sum, the baseline estimate for India’s economic growth in 2023-24 is 6.5 per cent, at 2011-12 prices, the document said.