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Even as the global economic outlook is challenging, the International Monetary Fund (IMF) had forecast India's economy to grow at a robust rate of 7.4 per cent in 2022-23, the highest among major economies.

According to the Monthly Economic Review published by the Ministry of Finance, the buoyant performance of some high-frequency indicators during the first four months of 2022-23 is consistent with IMF's forecast.

"Index of Industrial Production (IIP) and eight core industries point towards strengthening of industrial activity, while PMI (Purchasing Managers Index) Manufacturing touched an eight-month high in July with marked gains in growth of new business and output," the review noted.

The services sector, which was impacted the most by the Covid-19 pandemic, can emerge as a key growth driver, buoyed by the release of pent-up demand, easing of mobility restrictions and near universal coverage in vaccination, the review said.

While real estate and information technology business process managements have recovered completely to the pre-pandemic levels of 2019-20, the logistics, tourism and hotel industries continue to be on the path of recovery, having now come close to the pre-pandemic levels.

The review noted a decline in the Gross Non-Performing Assets (GNPA) ratio of the banking sector from 7.5 per cent in the June quarter of 2021 to 5.7 per cent in the June quarter of 2022.

The rising financial soundness of banks as well as that of the corporates have been boosting the year-on-year (YoY) growth of non-food bank credit since the June quarter of 2021. The YoY growth in non-food bank credit stood at 14 per cent in June 2022.

On inflation, the review said the domestic inflationary pressure has moderated the downward movement of global commodity prices along with the RBI's monetary measures, and the government's fiscal policies are expected to cap inflationary pressures in the coming months.

The other highlights of the review are:

* Foreign portfolio investors (FPI) in July have been net purchasers to the extent of $458 million. In August, until the 12th, FPI net inflows have been around $2.9 billion

* The net foreign direct investment (FDI) inflows were at $13.6 billion in Q1 of 2022-23, as against $11.6 billion during the corresponding period of the previous year

* The robust production of capital goods along with the government's capex push and large expansion in bank credit will uphold the investment activity