What's the article about?
- It talks about the steps that needed to be taken to maintain the Indian economy's macroeconomic stability in the face of growing uncertainty about the global economy's future.
- GS3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment; Effects of Liberalization on the Economy;
What's the crux of the article?
- The world economy is slowing down due to various issues such as COVID-19-induced disruptions, the Russia-Ukraine War, climate change, etc.
- As a result, central banks in developed economies have been aggressively tightening their economies.
- In such a context, a realistic assessment of the state of the economy is crucial for maintaining the macroeconomic stability of the Indian economy.
- The revised expectations suggest that the economy is likely to grow slower than what has been expected so far = around 6.5 per cent (earlier it was expected to grow at 7.2 per cent).
- Inflation will continue to remain above the central bank’s target.
- Despite the fact that both food and fertiliser subsidies are much higher than budgeted, the fiscal deficit is projected to be 6.5% of GDP.
- Government tax collection is doing great.
- Current Account Deficit will likely rise due to the elevated crude oil prices.
- Given the likelihood that these risks will not subside in the near term, the policy framework should be focused toward preserving macroeconomic stability. However, doing so requires first a realistic assessment of the state of the economy.