As per The Economic Survey Report 2023, the Budget 2023 will be focusing more on the demands which stimulate Industrial growth.
Fearing the demand, the industry has been gradually passing on the higher production costs, which has led to sticky but non-rising core retail inflation. Non-core retail inflation, on the other hand, comprising food and energy components, has been declining as local weather extremities have eased and interventions by the government to restrict price rises have proven effective.
The consequent decrease in overall retail inflation has sustained the pent-up consumer demand in the post-pandemic Indian economy, inducing an industrial recovery despite the global headwinds.Strong external demand also served the Indian industry well in FY22 when manufactured exports soared, responding to a rebound in global growth.
Trade had grown as bottlenecks in global supply chains eased. The export stimulus for the Indian economy persisted in the first half of FY23. In this half of the year, exports of goods and services as a share of GDP have been the highest since FY16.
Export growth may slow further in the second half of the current financial year and remain weak beyond that, too, if the global economy falls into recession. It was analysed that the strong domestic consumption growth and investment revival are expected to keep industrial production humming.
An increase in investment demand has emerged as another powerful stimulus to industrial growth. It has been triggered by a jump in the Capex of the central government in the current and the previous year as compared to the pre-pandemic years.
The surge in investment is also attributable to the policy actions taken by the Government
over the past several years. A beginning has been made in H1 of FY23, which recorded the
highest share of Gross Fixed Capital Formation (GFCF) in GDP among all half-years since FY15.
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