India’s economic maturity is shown by its inclusion in the J.P. Morgan index: Nomura, Dr. Aurodeep Nandi

The improvement in corporate profitability, the creation of private capital, and the expansion of bank credit are reasons why the Indian finance ministry is sure that the nation would experience 6.5% growth in FY24. According to the ministry’s August Monthly Economic Review, domestic demand, consumption, and investment drove Q1 2023 growth of 7.8%. Although the study underlined risks like rising crude oil costs and a monsoon deficit, it also stated that the September rains had contributed to reducing the rainfall deficit.

Despite the dangers of rising crude oil prices and monsoon deficit, the finance ministry expressed confidence that the nation will experience 6.5% growth in FY24, citing increased corporate profitability, private capital creation, and bank credit expansion. The 7.8% growth in the first quarter (April to June) was attributed by the ministry’s Monthly Economic Review for August to robust domestic demand, consumption, and investment. Additionally, a number of high-frequency indicators showed growth.

The evaluation stated that certain risks “need to be assessed,” such as the gradually rising price of crude oil on the international market and the effect of the August monsoon deficit on the Kharif and Rabi crops. At the same time, it noted that a portion of the rainfall shortfall at the end of August has been made up by the rains in September.

The review also noted that a stock market correction, following an overdue global stock market correction, is an ongoing risk, with the positive aspects of corporate profitability, private sector capital formation, bank credit growth, and activity in the construction sector counterbalancing these risks.

The research noted that the government’s ongoing emphasis on capital expenditure is what has led to the strength of domestic investment and that policies put in place by the federal government have also encouraged states to enhance their capex expenditures.

It said that the external demand had further complimented the domestic economic stimulus and that the positive performance of services exports had enhanced the contribution of net exports to GDP growth in Q1FY24.

High Frequency Indicators (HFIs) for July/August 2023 show that Q2FY24’s growth momentum was maintained, according to the statement.

According to the report, as of March 2023, a number of indicators point to the banking system becoming more resilient, including reducing non-performing assets (NPA), improving capital to risk-weighted assets ratio (CRAR), rising return on assets (ROA), and rising return on equity (ROE).

Data for Non-Banking Finance Companies (NBFCs) as of March 2023 also showed improvements in their profitability and risk-taking behaviours, the report added.

Furthermore, it stated that since April 2022, the non-food bank loan of Scheduled Commercial Banks (SCBs) has grown steadily and broadly, according to estimates by the RBI released in July 2023.

According to the report, core and food inflation declined from their July levels in August, resulting in a fall in retail inflation.

The precise measurements made by the Government efforts to lower core inflation to a 40-month low level included tightening monetary policy and adjusting the roles of numerous essential inputs. According to the report, food inflation is still high in several major economies worldwide.

According to the report, consumer food price inflation in India decreased to 9.9% in August as a result of the government’s targeted actions for particular crops, which included building up a buffer, purchasing from producing facilities, and subsidized distribution.

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