Heightened International focus on energy security in advanced nations could elevate geographical tensions: Fin Min

In the coming winter months, heightened international focus on energy security in advanced nations could elevate geopolitical tensions, testing India’s astute handling of its energy needs so far. In these uncertain times, it may not be possible to remain satisfied and sit back for long periods. Eternal macroeconomic vigilance is the price for stability and sustained growth, the finance ministry said in its latest monthly economic report on Saturday.

"Watchful and prudent fiscal management and credible monetary policy will remain essential for India to fulfil its growth aspirations. Both these pillars of public policy will enable benchmark borrowing costs for the government and the private sector to decline, facilitating public and private sector capital formation." said the monthly economic report.

The Indian government is confident that as external pressures ease, inflationary pressures in India are also likely to subside. As per the monthly economic report, Industrial metals and edible oil prices after peaking in March 2022 have softened, and supply chains are getting restored with decline in port congestion. "Overall, inflationary pressures in India appear to be on a decline with a pre-emptive set of administrative measures by the government, agile monetary policy and easing of international commodity prices and supply chain bottlenecks.

Increase in private consumption and higher capacity utilisation in the current year has further reinvigorated the capex cycle to take the investment rate in Q1 of 2022-2023 to one of its highest levels in the last decade. The government's spending on capital expenditure is likely to be sustained as buoyancy in revenue growth is expected to remain undiminished in the balance period of the current year, the report said.

The government in its monthly economic report also laid India as the fifth largest recipient of foreign direct investment during Q1 of 2022-2023, with India's exports growing at the second highest rate in this quarter despite the ongoing global slowdown.

On the consumption aspect, the report said that the contact-intensive services sector is likely to drive growth in 2022-23 building on the release of pent-up demand and near universalisation of vaccination. A sharply rebounding private consumption backed by soaring consumer sentiments and rising employment will sustain growth in the months ahead.

According to the report, increase in private consumption and higher capacity utilisation in the current year has further reinvigorated the capex cycle to take the investment rate in Q1 of 2022-23 to one of its highest levels in the last decade. The crowding-in of private investment has also been assisted by rising capital expenditure of the government that until August 2022-23 has been 35 per cent higher than the corresponding level of last year.

Broad-based growth in economic activity during Q1 of 2022-23 is reflected in improvements in employment indicators. Net payroll additions in EPFO doubled in this quarter compared to the corresponding period last year. The Periodic Labour Force Survey (PLFS) shows the unemployment rate in urban areas shrink for the fourth consecutive quarter to be at 7.6 per cent in Q1 of 2022-23, lower than the corresponding pre-pandemic level. Work demanded under MGNREGS has been diminishing since May and was at its lowest in August 2022, compared to the corresponding period of the previous two years, signalling a possible reduction in the unemployment rate in rural areas.