New Delhi: With the situation improving in West Asia and oil prices falling, the government expects the economy to recover, amid economic indicators indicating strong momentum in the first quarter.“Economic indicators released by the government continue to underline the resilience of the Indian economy despite global uncertainty. Strong GDP growth, expanding manufacturing and services activity, record automobile sales, good GST collections and resilient exports suggest that domestic demand and investment remain strong, although a weaker monsoon may impact the calculations to a limited extent,” an official said.There was significant uncertainty at the start of the first quarter with power, fertilizer and petrochemical supplies affected and prices rising, adding pressure to the weak rupee. Shipping was hit hard, hurting foreign trade.While the Indian economy grew by 7.7% last year, it is expected to expand by more than 6.6% in the current fiscal year, with government officials anticipating a faster expansion. Advanced indicators, such as GST collections, which rose 14% in June, factory output and the Purchasing Managers’ Index point to expansion.
Car sales were strong and electricity demand rose 11.2% in May, indicating strong economic activity, after a slowdown in April. Traffic at ports also rebounded, rising by more than 6%, indicating signs of life returning to normal.The government has sought to maintain capital expenditures and ensure strong investment in infrastructure. During April-May, capital expenditure stood at Rs 2.5 lakh crore, 12% higher with Railways at the helm. The state transporter spent more than Rs 84,000 crore in April and May, accounting for 30% of its annual capital expenditure, with money flowing into safety upgrades, signaling, train protection systems, new lines, gauge conversion and doubling of lines.“This means that infrastructure spending is front-loaded. Early spending helps speed up projects, improve implementation and support demand in sectors related to construction, steel, cement, transportation, logistics and equipment,” an official said.
