GatiShakti, PLI schemes to offset headwinds, boost growth: Indian govt

India may feel its impact, though the magnitude will, of course, depend on how long the dislocations in energy and food markets persist in this fiscal and how resilient India’s economy is to mitigate the impact, said the ministry’s monthly Economic Review.

Transient shocks may not have a big effect on real growth and inflation, it said.

With growing evidence of improving labour force participation and declining unemployment rate and the government’s unwavering commitment to provide continued support to the economically poor (the PM Gharib Kalyan Yojana was extended for another six months, up to the end of September 2022), the growth path ahead will likely be a more inclusive one, the report said.

It noted that the purchasing managers’ index (PMI) for services has also stayed in the expansionary zone continuously for eight months on the back of e-toll collection, e-way bill, railway freight and air cargo, among others, complementing the robust manufacturing sector.

The goods and services tax collections crossed ₹1.4 lakh crore in March this year, heralding the onset of post-recovery growth, it said, adding elevated PMI services also reflect growth in contact-based services, as states progressively relax pandemic-induced restrictions in view of India’s COVID-19 vaccination coverage expanding faster than the decline in cases of a new infection. In this backdrop, private consumption may be beginning to perk up, it said.

Observing that the capital investment by the central government for the period of April 2021 to February 2022 has surpassed the levels in the corresponding periods of pandemic and pre-pandemic years, it said, adding there are nascent signs that rising public capex may be crowding in private investments as well.

In a major vote of confidence in the attractiveness of the Indian economy as a major foreign investment destination, gross foreign direct investment inflows into the economy have risen to $69.7 billion in April-January 2021-22, the ministry said.

Investments funded through external commercial borrowings (ECBs) have continued to remain on an upswing, registering a 29.7 per cent growth during April-February 2021-22, vis-a-vis the corresponding period of last year, it noted.

Growing FDIs and other capital inflows have ensured a comfortable foreign exchange reserves position with an import cover of more than 12 months, it added.

ALCHEMPro News Desk (DS)