Economy
Indian Economy
The FY 2022-23 commenced with the Indian economy
facing headwinds in the form of inflationary pressures due to
rising energy and food prices. Supply chain bottlenecks also
remained a major constraint due to the protracted war in
Europe and the accompanying global sanctions.
Despite a challenging start, the Indian economy has
displayed resilience and grew 7.2% in FY 2022-23, aided by
sound macroeconomic fundamentals and improved high-frequency indicators. Sustained efforts taken by the Reserve
Bank of India (RBI) to rein in inflation by increasing the
repo rate by 250 basis points (bps) over the past year have
been reasonably successful. The Government’s continued
thrust on infrastructure-driven, capex-led economic growth,
together with signs of a revival of private sector investment
in manufacturing and an improvement in capacity utilisation,
has maintained the growth momentum.
The Government’s push for growth through larger
infrastructure spends continues in FY 2023-24. The
private capex continues to provide tailwinds to the growth
momentum. Buoyancy in tax collections during the current
fiscal year supports the capex-led growth aspirations. A
healthy balance sheet of private players, improving consumer
confidence and investment activity, as well as growing
demand conditions, will provide support to economic growth
in the near term.
It is expected that the prolonged geopolitical conflict in
Europe could continue to impact supply chain dynamics and
keep commodity prices volatile for a longer period. Rising
interest rates across the world could also influence capital
flows into the country. Finally, India, due to the structural
reforms and the infrastructure-strengthening efforts of the
Government and the monetary support from the RBI, is in
a better position to counter the challenges and sustain its
growth agenda.