Global Slowdown Spillover May Dampen India’s Exports Outlook: Finance Ministry
Resilient domestic demand and a reinvigorated investment cycle will provide impetus to economic growth, it said.
The spillover of a global slowdown may dampen India’s exports business outlook, but resilient domestic demand, a reinvigorated investment cycle, stronger financial system and structural reforms will give impetus to economic growth, according to the Finance Ministry.
The current retail inflationary pressures are expected to ease with fresh Kharif arrivals and a pass-through of lower input costs to consumers, it said in the monthly economic review by the Department of Economic Affairs for October 2022.
This is affirmed by the Reserve Bank of India’s inflation projections for the next two quarters, the review said.
Hiring by firms is likely to witness an improvement in upcoming quarters, driven by a rebound in new business gains, as firms continue to benefit from the lifting of Covid-19 restrictions and the possible sustaining of sales momentum witnessed during the festive season.
Increase in tractor sales in September and October also point towards improved sentiment and an expected increase in crop area sown.
Consumer Price Index-Wholesale Price Index Inflation differential narrows with the transmission of high input cost to retail inflation appearing to be nearly complete.
The wedge between CPI and WPI inflation has been closing again due to two reasons, the review explained.
A moderation of international commodity prices has led to an easing of wholesale inflation. Also, the pass-through of input prices by producers to consumers amid robust demand has led to an increase in retail inflation. Thus, the gap has narrowed to -1.6% in October 2022, signalling that higher input prices pass-through is near completion.
The magnitude of the pass-through of input cost to retail inflation is likely to be lower in the coming months, it said.