Economy may expand 7.3% in July-September, says finance ministry

The ministry also flagged worries around short-term pressure on Indian assets and the rupee, along with capital flowing towards geographies due to AI.

NEW DELHI: The finance ministry Thursday said the growth momentum extended into the second quarter, although at a more measured pace, and the economy may expand 7.3% during July-Sept.While flagging multiple parameters and high-frequency indicators to argue that growth has been sustained, the ministry’s latest Monthly Economic Report also came with warnings. “…global conditions have turned unfavourable again. Oil prices have spiked in Sept. Global bond yields have moved sharply higher and continued to climb. India’s bond yield has gone up by less but the lower risk premium pressures the Indian rupee although there is every possibility that, over the medium term, investors would appreciate the fundamental reasons behind the lower risk premium on Indian debt.

”It also flagged worries around short-term pressure on Indian assets and the rupee, along with capital flowing towards geographies due to AI.“At the same time, developed countries are also racing to secure investments to finance their renewed manufacturing aspirations amid increasing weaponisation of global supply chains. Thus, India, as do other developing nations, faces a stiff challenge to attract capital flows. Indications are, however, that foreign direct investment inflows, on a net basis, should do better this financial year than last.”