The government has said that taking into account the impact of ongoing geopolitical tensions, tightening global financial conditions, and slowing external demand on economic growth, the Indian economy is expected to grow at 4.4% in Q3 and 4.2% in Q4 of 2022-23, as projected by the Reserve Bank.
Minister of State (MoS) in the finance ministry, Pankaj Chaudhary, said in the Rajya Sabha that the government doesn’t come out with its own projection of quarterly GDP. However, the RBI, in its Monetary Policy Committee (MPC) meeting, come out with projections of quarterly as well as yearly estimates of economic growth.
India's real GDP had grown 6.3% in constant prices in the July-September quarter of the current financial year. The Reserve Bank of India (RBI), in its bi-monthly MPC meeting on December 7, had revised down the current financial year GDP growth forecast to below 7%. The MPC said the reasons behind lowering the GDP forecasts were headwinds emanating from protracted geopolitical tensions, global slowdown and tightening of global financial conditions.
In its monthly bulletin released on Tuesday, the central bank said the near-term growth outlook for the Indian economy is supported by domestic drivers as reflected in trends in high-frequency indicators. "Equity markets touched a string of new highs during November buoyed by strong portfolio flows to India. Headline inflation moderated by 90 basis points to 5.9%in November driven by a fall in vegetable prices even as core inflation remained steady at 6%. Waning input cost pressures, still buoyant corporate sales and turn-up in investments in fixed assets are heralding the beginning of an upturn in the CAPEX cycle in India which will contribute to a speeding up of growth momentum in the Indian economy."
On the government's efforts to pump in liquidity in the economy, the minister said a series of measures were announced during the Covid-19 pandemic, many of which are continuing. Some of these schemes are subordinate debt for stressed MSMEs, equity infusion for MSMEs with growth potential and viability through fund of funds, Emergency Credit Line Guarantee Scheme (ECLGS), additional support to farmers via concessional credit and PM Street Vendor’s AtmaNirbhar Nidhi.
He said the RBI also announced several policy measures to enhance liquidity support for financial markets and other stakeholders. These were improving the flow of credit, deepening digital payment systems, and facilitating innovations across the financial sector by leveraging on technology and issuing revised regulatory frameworks for NBFCs, he said.
Other structural reforms, which will help boost liquidity in the system, include the change in the definition of MSMEs, higher FDI limits in the defence and space sector, development of industrial land or land bank and industrial information system, revamp of viability gap funding scheme for social infrastructure, new power tariff policy, and incentivising states to undertake sector reforms, among others.
