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Finance Ministry Exudes Confidence in India’s Economic Growth
Finance Ministry exuded confidence that the country will achieve 6.5% growth in FY24 on the back of improved corporate profitability, private capital formation, and bank credit growth, notwithstanding the risks of rising crude oil prices and monsoon deficit.
Significance
The Finance Ministry’s confidence in India’s economic growth is significant as it provides reassurance to investors and stakeholders about the country’s economic prospects. The projected growth rate of 6.5% in FY24 indicates a positive outlook and potential progress for the Indian economy.
Features
The Finance Ministry highlighted key factors contributing to the expected growth, including improved corporate profitability, private capital formation, and bank credit growth. These factors indicate a favorable business environment and increased investment activity in the country.
Objectives
The objective of the Finance Ministry is to promote and sustain economic growth in India. By expressing confidence in achieving a 6.5% growth rate, the ministry aims to instill optimism and attract investment in various sectors, thereby driving economic development.
Effects
If the country indeed achieves a growth rate of 6.5% in FY24, it would lead to several positive effects on the Indian economy. These may include job creation, increased government revenue, improved living standards, and enhanced investor confidence.
Pros and Cons
While the projected growth is promising, there are potential risks to consider. Rising crude oil prices and monsoon deficit pose challenges that can impact economic stability. However, the Finance Ministry acknowledges these risks and remains confident in the country’s ability to overcome them.
Fun Fact
Did you know that India is one of the world’s fastest-growing major economies, and its GDP is expected to surpass several developed countries in the coming years? The Finance Ministry’s confidence in achieving 6.5% growth further reinforces India’s growth trajectory and economic potential.
Mutiple Choice Questions
1. According to the Finance Ministry, what factors contribute to the projected 6.5% growth in FY24 for the country?
a) Improved corporate profitability, private capital formation, and bank credit growth
b) Rising crude oil prices and monsoon deficit
c) Global stock market correction and private sector formation cycle
d) Record e-way bills generation and electronic toll collections
Explanation: The correct answer is a) Improved corporate profitability, private capital formation, and bank credit growth. The Finance Ministry stated that these factors are expected to contribute to the projected growth.
2. What are the risks identified by the Finance Ministry for the Indian economy?
a) Climbing oil prices and monsoon deficit
b) Overdue global stock market correction and low private sector formation
c) Record e-way bills generation and electronic toll collections
d) High food inflation and declining core inflation
Explanation: The correct answer is a) Climbing oil prices and monsoon deficit. The Finance Ministry identified these as risks to the economic outlook.
3. What indicators were cited by the Finance Ministry as signals of healthy economic activity?
a) Record e-way bills generation and electronic toll collections
b) Climbing oil prices and monsoon deficit
c) High food inflation and declining core inflation
d) International bond yield and S&P 500 index
Explanation: The correct answer is a) Record e-way bills generation and electronic toll collections. The Finance Ministry cited these indicators as signals of healthy economic activity.
4. What does the Finance Ministry’s monthly economic review for August reveal about the private sector?
a) Private sector is in good health and businesses are investing
b) Private sector is facing a decline in advance tax payments
c) Private sector is experiencing a stock market correction
d) Private sector formation cycle has come to a halt
Explanation: The correct answer is a) Private sector is in good health and businesses are investing. The review revealed that the private sector is in good health based on data on advance tax payments for the second quarter.
5. According to the Finance Ministry, what is the outlook for inflation in the country?
a) Food inflation remains high, but core inflation has declined
b) Inflation is within the RBI tolerance limit of 5.6%
c) Core inflation is the lowest in the last 40 months
d) Government interventions have targeted specific crops to ease inflation
Explanation: The correct answer is a) Food inflation remains high, but core inflation has declined. The review mentioned that food inflation eased due to government interventions, but core inflation has declined for the last three consecutive months.
Brief Summary | UPSC – IAS
The Indian Finance Ministry is confident that the country’s economy will achieve 6.5% growth in the fiscal year 2024. Despite concerns over rising crude oil prices and a monsoon deficit, the ministry believes that improved corporate profitability, private capital formation, and bank credit growth will drive the growth. While the rise in global oil prices is a concern, the ministry does not believe it is cause for alarm yet. Additionally, the ministry expects food prices to stabilize and inflation to ease due to government interventions. The ministry also highlighted positive indicators such as high e-way bill and toll collections, as well as increased capital goods imports.