Finance Ministry on Tuesday said that the Indian economy is well prepared to absorb any upcoming external shock in terms of capital outflow induced by an uncertain geo-political environment, however inflation remains a concern.
The report said India has adequate forex reserves to absorb any upcoming external shock.
“Notwithstanding global developments, India’s forex reserves also stood at record high and large enough to finance more than 12 months of import,” The report added.
The report said despite the challenges, India’s external sector exhibits signs of resilience with robust growth in merchandise exports, which increased to $374.8 billion during April 2021 – February 2022.
However it warned that high energy and commodity prices may pose upside risk to the inflation outlook in the near- medium term.
For the coming fiscal year 2022-23 RBI has projected CPI inflation at 4.5%. The report says that this requires close monitoring.
“Recent increase in prices of food and energy commodities and metals warrants continued vigil on the inflation front,” the monthly economic report said.
Going forward the ministry added that the various economic indicators suggest that India will continue to grow in the next financial year and enhanced capital expenditure will further boost the growth and employment through multiplier effect.
