India sees obstacles to high growth in current fiscal year – finance ministry

The fundamentals of the Indian economy remain strong but adverse global developments and “negative cross-border spillovers” could be obstacles to the country achieving a high growth path in the current fiscal year, the finance ministry said on Thursday.

Growth momentum seen in the first three months of the year are expected to continue in the three months to the end of June, the ministry said in its monthly economic review.

Asia’s third largest economy is scheduled to release April-June gross domestic product data on Aug 31. The economy is projected to grow 6.5% in the fiscal year to March 2024.

“Negative cross-border spillovers and adverse global developments can act anytime as a deterrent to achieving the potential high growth path in the current financial year,” the report said.

The report expects India’s trade deficit to narrow in next few years, driven by strong performance in services exports.

It said factors including the delayed impact of monetary policy tightening, geopolitical stress, disruptive weather conditions and a slower Chinese recovery could further dampen global growth.

Rising commodity prices could lead to further monetary tightening by developed countries, leading to currency and capital outflows from developing nations, it said.
Source: Reuters (Reporting by Nikunj Ohri and Nidhi Verma; Editing by Conor Humphries)