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Extending geopolitical conflicts to India could cause negative wealth effects, says Eco Survey

Online Niel October 28, 2024

India’s economic outlook remains upbeat for the fiscal year, with growth rates expected to be between 6.5% and 7.0%, according to recent data. Economic study by Ministry of Finance.

However, global geopolitical tensions, particularly escalating conflicts and growing geo-economic fragmentation, could pose significant risks to this outlook, FinMin said on Monday. The potential for disruptions in global trade and finance arising from unpredictable trade policies of major economies may affect India’s external sector despite its current stability.

“Risks stem from global factors such as geopolitical conflicts, growing geo-economic fragmentation, uncertainties related to trade policies of major economies and subsequent financial market reactions,” the report said, adding, “Their spillover effects on India could cause negative effects on wealth. the impact on household sentiments and the change in spending intentions for durable goods’.

Meanwhile, the government noted that domestic factors are providing strong support, with expected positive agricultural output, festive increases in demand and anticipated increases in government spending expected to boost investment activity.

The ministry said stable demand conditions are crucial but require monitoring, especially as high food prices have recently led to localized inflationary pressures. “However, at the margin, demand conditions in the economy are under scrutiny. Given the low overall inflation, except for a few food items, the real price of money may have risen.”