While domestic consumption and investment demand will continue driving India’s growth, global and regional uncertainties and domestic disruptions may keep inflationary pressures elevated in the coming months, finance minister Nirmala Sitharaman said on Thursday.
Following the 108th meeting of the World Bank and the International Monetary Fund (IMF)-led development committee meeting at Marrakesh, Sitharaman said in a statement that while the government has already taken steps to restrain food inflation, merchandise export growth faces challenges in the backdrop of slowing global demand.
“Services exports continue to do well and are likely to continue doing so as the preference for remote working remains unabated, typically manifested in the proliferation of Global Capability Centres,” she said. India’s retail inflation eased for the second consecutive month in September to 5.02%.
Consumer Price Index (CPI)-based inflation moderated to 6.83% in August from a 15-month high of 7.44% in July, thus meeting the Reserve Bank of India’s (RBI) target range of 4-6% during September.
Food inflation, measured by the Consumer Food Price Index, which accounts for nearly half of the overall consumer price basket, slowed to 6.56% in September, down from 9.94% in August and from 11.51% in July, according to the latest data released by the ministry of statistics and programme implementation.
Sitharaman said Indian exports have performed well so far this financial year (as of July 23), mainly led by services export growth. “Improvement in external balance was accompanied by investor confidence in India, as reflected in strong foreign investment inflows,” she said.
“As a result of robust foreign inflows and a decline in imports, India’s foreign exchange reserves have strengthened and stood at $603.9 billion at the end of July 2023,” she added.
Sitharaman said India is likely to achieve its sustainable development goal target on multidimensional poverty well ahead of its target of 2030.
“From an economic growth perspective, the 135 million (13.5 crore) Indians escaping poverty between 2015-16 and 2019-21 and graduating to the middle class will boost the engine of self-sustained growth through consumption, savings, and human capital accumulation,” she added.