India’s growth prospects intact in FY24; sequential increase in food inflation in June: Finance ministry report

economictimes.indiatimes.com:

finance ministry said on Thursday. «Indian economy’s domestic dynamics continue to be strong. Real GDP growth data for the last quarter of FY23 reaffirmed the ability of the Indian economy to grow on the strength of its domestic demand and investment despite a rise in global uncertainties and moderation in global output,» it said in its monthly economic report for June.

Growth momentum gathered in this quarter is likely to be sustained in the June 2023 quarter. However, price of such stability and growth is eternal policy vigilance, it noted. On inflation, the ministry said that inflationary pressure has significantly declined in the June 2023 quarter compared to the corresponding quarter last year and has entered the tolerance band of the RBI.

But surge in food prices has led to sequential increase in food inflation in the month of June. «The core inflation has also been softening since the beginning of the June 2023 quarter, indicating a restoration of overall price stability in the economy. However, the recent spike in the prices of ‘fruits,’ ‘vegetables,’ and ‘pulses and products owing to weather-related disruptions has led to a sequential increase in food inflation for the month of June 2023.

As inflation has been reined in only recently while threats of supply-side shocks, including El Nino, persist, the RBI and the government continue to be guarded for appropriate and timely policy response,» it said. The report also outlined the importance of fiscal consolidation along with narrowing of current account deficit for avoiding the challenge of a rising twin deficit. «The government's progress towards achieving its fiscal target for the year, along with the presence of favourable external sector indicators during the