The Indian economy will grow at a slowing pace, however, better than other emerging economies, as indicated in the monthly review report of the Finance Ministry – Monthly Economic Review May 2022. This comes in the backdrop of various international agencies predicting slowing of economic growth globally. The various factors responsible for the tepid growth would include supply bottlenecks, earlier than expected withdrawal of monetary accomodation, commodity price inflation.

The Balancing Act: Putting macro-economic stability above near-term growth

The report added that the aforementioned combination to be maintained will require prioritising macro-economic stability over short-term growth, which will result in the creation of domestic and foreign capital to fund India’s investment needs and economic growth to improve the employment scenario and quality of life aspirations of Indians. 

Steps to drive Economic Growth  

Moreover, in the medium term, various government announcements like the successful rollout of the Production Linked Incentive scheme (PLI), building capacities of renewable sources of energy while working on various fronts to come up with alternatives to reduce import dependence on crude-oil will further drive economic expansion.

The report stresses on India’s high vaccine coverage and the strength of the financial sector to better capacitate weather challenges such as, “managing its fiscal deficit, sustaining economic growth, reining in inflation and containing the current account deficit while maintaining a fair value of the Indian currency.”

The provisional estimates of GDP released on May 31, 2022 indicate India’s complete revival to the pre-pandemic levels although the contact-intensive sectors are yet to recover, noted the report.