Union Finance Ministry’s Monthly Economic Review Highlights Economic Resilience amid Global Challenges

The Union Finance Ministry has highlighted the ongoing geo-political upheavals and global commodity price volatility as significant challenges for the Indian economy in its latest Monthly Economic Review (MER) for April 2024. Despite these challenges, the ministry expressed confidence in India’s ability to navigate through them smoothly, thanks to the macro-economic buffers built during the post-Covid economic management.

Retail inflation in India for April dropped to a 10-month low of 4.83%, marking the second consecutive month below the 5% level. This decline was mainly attributed to easing core inflation, although food prices remained high. The retail inflation has been within the RBI’s tolerance range of 2-6% for seven months in a row but has exceeded the central bank’s medium-term target of 4% for 54 consecutive months.

The rise in benchmark Brent crude prices by more than 6% year-to-date, primarily due to the conflict in the Middle-East, has added to the economic challenges faced by India. However, the MER also noted that the strong economic performance seen in FY24 has continued into the current April-June quarter of FY25.

The report highlighted that industrial activity is picking up momentum, and fixed investment is increasing, supported by government capital spending. The Reserve Bank’s forward-looking surveys indicate improving consumer confidence and industrial outlook, pointing towards a positive economic momentum in the coming months.

Overall, the Finance Ministry remains optimistic about India’s economic prospects despite the global challenges, emphasizing the resilience and strength of the country’s macro-economic fundamentals.