Economy: Fear of sluggish growth in the economy will help in controlling inflation, the Finance Ministry said - continuous efforts to bring GDP back on track

Posted on 21st Jun 2022 by rohit kumar

Like the global GDP, the Indian economy is expected to slow down. However, it will help in controlling inflation. The Finance Ministry said on Monday that the country faces challenges to sustain growth, manage fiscal deficit, controlling inflation, and current account deficit shortly. However, India is in a better position to deal with these challenges than other countries.

 

The ministry said in the monthly economic review, that developing countries are facing similar challenges. India is in a better position among them. This is because of the stability in the financial sector and the success of the Kovid vaccination. The economy came out of the pre-corona level in 2021-22. The growth rate of real GDP in the last financial year stood at 8.7%, which is 1.5% higher than in 2019-20. India's growth prospects are strong. Capital formation and job creation are expected to pick up in the remainder of the current decade.

 

Fiscal deficit will increase Rupee continues to fall

 

The fiscal and current account deficit is expected to increase after the reduction in excise duty on diesel petrol. This will increase the effect of costly imports and depreciate the value of the rupee.

 

The risk of a fall in the value of the rupee is there so long as FPIs keep on withdrawing capital out of concern about the policy rate hike to control inflation in developed countries.

 

The risk of high inflation is lower than in the world

 

According to the report, retail inflation in India remains at a high level due to expensive imports. Due to excessive heat, the prices of food items in the domestic market have increased. However, the price of crude oil may come down in the coming time. High inflation is expected in the world with a low economic growth rate, but the risk is low in India.

 

On the RBI's monetary policy for May 2022, the ministry said, the repo rate has been increased to control inflation. The central bank has also taken steps to withdraw the excess cash available in banks. The impact of these measures will be seen on the growth rate and inflation of the economy in the coming months. Retail inflation is above 6% for 4 months.

 

$100 billion can be withdrawn from the market: RBI

 

The RBI said that in adverse conditions, the potential portfolio withdrawal in a year could be around 3.2 percent of GDP, or up to $100 billion. Potential capital outflows in a black swan event involving multiple shocks can go up to 7.7 percent. Hence, there is a need to maintain a liquidity surplus to avoid volatility. The net withdrawals from the equity market of portfolio investors have so far reached 1.98 lakh crores in the calendar year 2022. The Black Swan event could be the simultaneous occurrence of all the adverse shocks experienced in Indian history, which could lead to an economic storm.

 

Four out of every 10 employees want to leave the job even after increasing the salary

During the epidemic, people have changed jobs fiercely in every field. This cycle may continue in the future as well. The special thing is that despite the salary increase, four out of every 10 employees want to leave the job. According to the report of Management Consulting Company of Naman HR, employees from three sectors are at the forefront of job loss despite the salary increase. The service sector is at the forefront with 37 percent. The manufacturing sector is second with 31% and the IT sector is in the third position with 27%. The reason for leaving the job is also the slow increase in salary.

 

employees thinking of starting a business

 

One employee in 10 is considering leaving his job to start his own business. 35% of employees in the age group of 30-45 years want to become entrepreneurs. 44% of employees aged 20-29 are not currently considering resignation.

 

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