Domestic demand, investment to drive growth, says Economic Review

livemint.com:

New Delhi: The Indian economy will grow on the strength of domestic demand and investment despite a rise in global uncertainties and moderation in global output, the economic review for June released on Thursday said. However, negative cross-border spillovers and adverse global developments can act as a deterrent to achieving the potential high-growth path in the current financial year, the report added.

The Economic Review released by the finance ministry’s department of economic affairs (DEA) said that the government’s emphasis on capital expenditure in recent years has given a much-needed thrust to investments in key infrastructure, resulting in crowding in of private investment to kick-start job creation, income, productivity, demand and exports. These will be supported by favourable demographic dividends over the coming years, it said.

However, the latest monthly review cautioned that higher commodity prices could mean further monetary tightening in the developed world, which will impact the monetary policy trajectory in developing countries due to currency and capital flow effects. “In sum, India’s improved monsoon performance, solid fiscal performance, continued expansion in manufacturing and services sectors, vigorous capital expenditure spending by the public and private sectors augurs quite well for India’s macroeconomic stability and growth in FY24," it said.

“But the price of such stability and growth is eternal policy vigilance," it added. Going forward, India’s domestic fundamentals remain strong, the publication said.