In year of global risks, India pitches stability & growth – Times of India

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NEW DELHI: India’s economy has consolidated the recovery from the pandemic’s crushing impact in 2023. In the New Year, it has a tough task of sustaining the growth momentum against the backdrop of a raft of challenges both domestic and global.
India has emerged as the fastest growing major economy in 2023 and most forecasts now peg growth close to 7% for the current fiscal year that ends in March 2024. The manufacturing sector has seen a strong rebound along with construction.
The deft handling of the economy by the Centre and Reserve Bank of India (RBI) have attracted praise, with the latest International Monetary Fund (IMF) report saying that “India’s strong economic performance supported by macroeconomic and financial stability is expected to continue with balanced risks”.
But 2024 could pose several challenges. The geopolitical situation remains fragile and it will continue to impact economies around the world, hobbling exports and impacting the cost of living.
The country also faces a general election in April-May 2024, which is expected to slow some of the policy measures as focus shifts to the polls. The prospect of a stable government with a renewed focus on accelerating reforms might be comforting.

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The challenge posed by inflation is also expected to play out for a while, although it appears that the threat of rising food and vegetable prices is likely to be temporary.
Prospects of an interest rate cut in the second half of the year should augur well for financial markets and help in consolidating the growth momentum. This should also help in strengthening domestic demand, which has been robust so far.
On the policy front, the acceleration of the government’s privatisation agenda should lift sentiment and help attract investment. The continued focus on infrastructure should also help fire growth boosters.
Two critical sectors — agriculture and services — have shown some signs of slowdown and policy measures would be needed to find durable solutions to step up growth. Rural demand has shown signs of revival and all efforts are needed to ensure that there is a sharp rebound to support overall growth.
Another crucial challenge that faces the economy is energy transition and how it navigates that in the next few years. So far, the country has fared admirably on this front but it is likely to get tougher from here.


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