The finance ministry says India cannot take its growth performance for granted. While the economy grew 7.3% in the July-September quarter, global challenges and weak monsoons could slow this momentum. September manufacturing data showed strength, but officials want policymakers to stay alert as external risks and inflation continue to rise.
Summary
The government has sought to temper expectations of the Indian economy's growth momentum as challenges stiffen. Rightly so. Policymakers need to stay on their toes.
Amid all the flux in the global economy, the finance ministry's economic review for September is reassuring but also sobering. Though it sees India's economy growing 7.3% in the July-September quarter, an enviably high rate, the momentum may be slowing. Domestic and external challenges abound, making it harder to hold that pace.
The impact of weak monsoon rains on farm output, high oil import bills, inflation trends and globally hardening interest rates could all weigh on the economy. "India cannot afford to take its growth performance for granted," it said. Weaponization of supply chains and geopolitical polarization are intensifying in its analysis. Overall, its assessment has a cautious tone, which should keep policymakers on their toes.
Monthly indicators of economic activity, thankfully, have held up well. September's purchasing managers' index reading for manufacturing was at 55.1, up from 52.8 in August, and the month's gross GST revenue mop-up of ₹2.04 trillion was 15% over last year's level.
India's stock market, though, seems to have turned into a one-way street lately. It has been reacting disproportionately to bad news. When that might change is hard to bet on.