homeeconomy NewsFinance Ministry says India's macroeconomic management has been stellar, but external sector a possible challenge
Finance Ministry says India's macroeconomic management has been stellar, but external sector a possible challenge
The finance ministry said India needs to closely watch FDIs and continue taking measures to facilitate inflows. The FDI policy space could also require the government's attention in the coming months and years.
The Finance Ministry on Thursday said India's India's macroeconomic management has been stellar, but this is not the time to rest on laurels, nor risk diluting the economic stability. It cautioned that the external sector could challenge the growth outlook this fiscal and that foreign direct investments required to be watched closely.
The likely risk factors include geopolitical stress, volatility in global financial systems, sharp price correction in global indices, high magnitude of El Niño impact, and modest trade activity.
The ministry said India needs to closely watch FDIs and take continued measures to facilitiate inflows. The FDI policy space could also require the government's increasing attention in the coming months and years.
The finance ministry stated that resolving last mile infrastructure issues, availability of labour and large capacity creation are needed.
The European Union's carbon border adjustment mechanism is also a downside risk to exports, the ministry added. Reporting the carbon content in exports to the EU will be required from October 1. In April, the EU approved the plan to impose a levy on high-carbon goods imports, the first such plan in the world, from 2026.
It said signs of rebound in private capex is also visible in proxy indicators, whereas there is significant upscaling in government capex.
The manufacturing sector requires additional capacity creation, while its capacity utilisation is above its long-run average.
The ministry said debt leverage is on a glide path and moderated to 82.6 percent in the third quarter of FY23. Fiscal prudence could be a fiscal stimulus via lower borrowing cost, the ministry said.
(Edited by : C H Unnikrishnan)
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