Inflation to ease, economy to grow at a ‘moderately fast pace’: Treasury Department

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The ministry said inflation will ease in the coming months with the arrival of Kharif crops. (File)

New Delhi:

India is well positioned to grow at a “moderately fast pace” in the coming years, thanks to macroeconomic stability, despite global monetary tightening, a report from the Treasury Department said today.

It further said that inflationary pressures will ease in the coming months with the arrival of the kharif crops and at the same time employment will increase as the business outlook improves.

The Monthly Economic Review for October 2022 also warned that US monetary tightening is a “future risk” that could lead to a fall in stock prices, weaker currencies and higher bond yields, resulting in higher borrowing costs for many governments around the world. world.

It said a rapid deterioration in global growth prospects, high inflation and deteriorating financial conditions have heightened fears of an impending global recession.

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The spillover effects of the global slowdown may dampen the outlook for Indian exporters. However, resilient domestic demand, a revitalized investment cycle, a stronger financial system and structural reforms will boost economic growth going forward.

“In a world where monetary tightening has weakened growth prospects, India appears well placed to grow at a moderately fast pace in the coming years because of the priority it assigns to macroeconomic stability,” the report said.

The ministry said India’s food security concerns have been addressed so far in the current year and will continue to be given top priority by the government.

“Easing in international commodity prices and the arrival of new kharif will also dampen inflationary pressures in the coming months,” the report said.

India’s wholesale and retail prices fell in October after remaining high for most of the year, mainly due to supply chain disruptions following the outbreak of war between Russia and Ukraine in February.

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Retail or Consumer Price Index (CPI) inflation fell to a 3-month low of 6.7 percent, while wholesale or WPI (Wholesale Price Index) inflation hit a 19-month low of 8.39 per cent.

Russia and Ukraine are among the top producers of essential agricultural commodities, including wheat, corn, sunflower seeds and inputs such as fertilizers.

Together with other countries on the Black Sea, they form the breadbasket of the world.

In addition to uncertain macroeconomic prospects, the year 2022 also highlighted the vulnerability and interconnectedness of the global food system to shocks, the ministry said.

Grain availability in India was impacted by the early heat waves and Southwest monsoon shortage in the current year. However, export restrictions have ensured that the country’s needs are fully met, it added.

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With regard to the employment situation, the ministry said that in India, the recovery in economic activities across all sectors has improved the overall employment situation in the country.

Net payroll additions in EPFO ​​(Employees’ Provident Fund Organization) grew by double digits in September 2022, reflecting improved formalization of the economy.

“Corporate hiring is likely to show improvement in the coming quarters, driven by a rebound in new company hiring as companies continue to benefit from the lifting of COVID-19 restrictions and the optimism generated by the strong sales volumes during the holiday season.” said the ministry.

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