Finance Ministry Says Good Rains, Rabi Harvest May Help Firewall Against Global Pressures
Harvest for the rabi marketing season is expected to temper prices of key items like wheat and chana, the April Monthly Economic Review said.
Amid global uncertainty, India's economic momentum in the first quarter of fiscal 2025 should continue along FY24 trends, according to the Ministry of Finance.
Harvest of the Rabi crops, prediction of a normal southwest monsoon and food price stabilisation measures like open market sales, stock monitoring and trade policy measures will shape future inflation paths, noted the Department of Economic Affairs in its Monthly Economic Review released on Friday.
"The positive indications in the farm sector should help India firewall against any adverse pressures that may arise from geopolitical tensions and global commodity prices," the review said.
The Reserve Bank of India forecasts 4.9% retail inflation for the first quarter of fiscal 2025. In April, India's retail inflation slightly decreased to 4.83% from 4.85% in March, which has further declined from 5.10% and 5.09% in January and February, respectively.
The harvest for the Rabi marketing season for 2024-25 is expected to temper the prices of key items like wheat and chana. The prediction of a normal southwest monsoon also augurs well for food production and easing of price pressures.April Monthly Economic Review
According to the April review, domestic manufacturing is also expected to receive stronger external support in the upcoming months as consumer sentiment from Europe and the US builds.
The number of organisations in the US and Europe focusing on re-industrialisation has increased, with many focusing on improving supply chain resilience, it said.
"This can benefit India's manufacturing firms as part of the 'China Plus One' strategy. The EXIM Bank of India has forecasted that merchandise exports will post double-digit growth in Q1 of FY25," the April review said.
Closing on a high, India estimated a new benchmark at Rs 778.21 billion from the total merchandise and services trade in FY24.
In terms of domestic indicators, the ministry alluded to high-frequency indicators like GST collections, e-way bills, electronic toll collections, the sale of vehicles, purchasing managers’ indices, and the value and number of digital transactions to suggest that the first quarter of FY25 will grow along the economic momentum seen in FY24.
Uncertainty from geopolitical tensions and volatility in global commodity prices, like petroleum, are tailwinds that continue to remain on the ministry's radar.
