“Global conditions have turned unfavourable again”: Finance Minister
NEW DELHI India’s economic growth momentum continued into the second quarter, although at a more measured pace, with the Finance Ministry estimating that the economy could expand 7.3% during July-September. The assessment was included in the ministry’s latest Monthly Economic Report, which cited several high-frequency indicators to indicate that growth remained sustained. The report, however, flagged concerns over worsening global conditions. Oil prices increased sharply in September, while global bond yields also moved higher and continued to rise. India’s bond yield increased by a smaller margin, but the ministry said pressure from the lower risk premium could weigh on the Indian rupee. The ministry also warned of possible short-term pressure on Indian financial assets and the rupee. It noted that capital flows were increasingly being directed towards geographies associated with artificial intelligence, adding another challenge for developing economies seeking international investment. According to the report, developed countries are competing to attract investments to finance renewed manufacturing ambitions as global supply chains become increasingly weaponised. This competition could make it harder for India and other developing economies to secure capital flows needed for investment and expansion. Despite these challenges, the ministry indicated that foreign direct investment inflows could perform better on a net basis during the current financial year compared with the previous year. The report therefore presented a mixed assessment of the economic outlook, pointing to continued domestic growth momentum while highlighting risks arising from global oil prices, rising bond yields, currency pressures and international competition for capital. The projected 7.3% growth for the July-September quarter reflects the ministry’s assessment that economic activity remains resilient despite an increasingly uncertain external environment and changing global investment patterns.
