High energy and other commodity prices and supply disruptions from the Russian-Ukrainian conflict pose a challenge to the growth path and upside risks to inflation, the Ministry of Foreign Affairs said. Finance in its monthly economic review report for March, released Thursday. The movement in oil prices is expected to dominate inflationary trends in the coming months, he added, adding that the government had taken steps to diversify import sources, including buying cheaper crude oil from of Russia and diversifying energy sources beyond traditional hydrocarbons.
GatiShakti and production-related incentive programs will offset global headwinds and boost investment, leading to strong post-recovery growth for India’s economy, he said. “The LIP programs in the 14 sectors will increase the competitiveness of manufacturing sectors by leveraging their untapped potential to achieve higher export growth and realize the vision of Atmanirbhar Bharat,” the report states.
Rising commodity prices, as well as supply chain disruptions caused by geopolitical tensions between Russia and Ukraine pose a challenge to global economic activity, he said, adding that the he extent of the impact would depend on the persistence of high prices. The ministry said the domestic economic momentum of government capital spending, increasing GST catch-up and importing capital goods “provide reassurance that the impact on the economy could escalate.” prove tolerable”.
The dated price of Brent crude oil, which makes up the bulk of India’s crude oil basket, has hovered around $105-106 a barrel since April 1, after rising above $135 in the first and second week of March against around $95 just before the crisis. , it said. “Affordability is desired as even the current level of the international crude price, if sustained for long, could prevent India from achieving a real economic growth rate north of 8% in FY23” , did he declare.
Improving labor market indicators such as labor force participation, reduction in the unemployment rate and the highest net addition of ETH subscribers since April 2019 show a recovery in employment prospects , according to the report. ETH net subscribers reaching 15.3 lakh in January, 37.4% more than in the corresponding period of the previous year.
PMI services also remained in the expansion zone continuously for eight months thanks to electronic toll collection, e-Way Bill, rail freight and air freight, among others, complementing the robust manufacturing sector. , did he declare.
GST collections topped Rs 1.4 lakh crore in March 2022, heralding the start of post-recovery growth, he said. Private consumption could start to recover, the report notes.
Observing that capital investment by the central government for the period April 2021 to February 2022 exceeded the levels of the corresponding periods of the pandemic and pre-pandemic years, he said, adding that there were emerging signs that the increase in public investment could pile up in private investment as well.
The war in Ukraine weighs
Rising commodity prices, along with supply chain disruptions caused by geopolitical tensions between Russia and Ukraine, pose a challenge to global economic activity.
The report said the pandemic still casts a shadow over the global economic outlook in 2022, noting the ongoing fight to contain infections in Shanghai China. He said, however, that since Delhi and Maharashtra have now made masks optional, it reflects their belief that the pandemic is under control. The hope is that any new variant such as Omicron XE would not pose a serious threat to economic recovery, he said.
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