Growing fears recession could affect India’s export outlook: FinMin report

Fears of a global recession have grown, which could affect India’s global exports, a Finance Ministry report said on Thursday. However, India’s overall growth will be boosted by other developments.

India’s exports fell 16.6 percent in October to $29.78 billion for the first time this fiscal year. “A rapidly deteriorating global growth outlook, high inflation and worsening financial conditions have fueled fears of an impending global recession. A global slowdown could dampen the outlook for India’s export businesses; However, robust domestic demand, a strengthened financial system and a reinvigorated investment cycle combined with structural reforms will drive further economic growth,” the report prepared by the Economic Affairs Department of the Ministry of Finance said.

Moody’s forecast

Various agencies have reduced the projected growth rate for India. GDP growth rate estimates are between 5.9 percent and 7 percent. Moody’s Analytics on Thursday said India is headed for slower growth next year, in line with its long-term potential. Moreover, domestic investment and productivity growth in technology as well as agriculture can accelerate. However, if high inflation persists, the Reserve Bank of India may take the repo rate above 6 percent, leading to weaker GDP growth.

Various agencies have reduced the projected growth rate for India | Photo Credit: bakhtiar_zein

However, the Finance Ministry report was still optimistic and listed seven reasons why. In a world where monetary tightening has dampened growth prospects, India appears well-placed to grow at a moderate pace in the coming years due to its priority on macroeconomic stability. While the private sector – financial and non-financial – repaired balance sheets, capital formation suffered. The report says that in the second decade of the millennium, the stress on the financial system, as a result of the credit boom observed in the first decade, is already behind us.

It was reported that the balance sheets of the private sector are healthy and there are signs of the beginning of a new period of private sector capital formation. But more importantly, the government significantly increased capital spending when the private sector became cautious due to balance sheet strains. Budget capital expenditures have increased 2.8 times over the past seven years. In addition, he implemented structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code.

The government dealt decisively with the problems on the external security front. This has helped create an affordable and advanced public digital infrastructure that has allowed for increased formalization of the Indian economy and broadening of the tax base, among other benefits. Finally, he carefully used financial and monetary resources to provide targeted assistance to the needy segments of the population during the pandemic.

Further up

“Sustained macroeconomic stability, of which fiscal prudence is a part, and implementation of various pioneering policies like Gati Shakti, National Logistics Policy and Manufacturing Linked Incentive schemes to increase the manufacturing share of employment are further contributing to India’s growth. have prospects”, the report concluded.