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With the IMF revising India's growth projection upwards by 20 basis points to 6.3 per cent in October, it shows the growing confidence of global analysts as well in India’s economic strength, amid global uncertainties and fresh geopolitical challenges.

This was stated by the finance ministry's economic review for September 2023.

"Strong private consumption demand has been a major driver of India’s economic growth in the recent period," the review released on Monday said.

In addition, it said that at least two additional drivers of growth have emerged, the first is the gradual strengthening of investment demand. Investment has hitherto been propelled mainly by the capital spending of the Union government and the crowding-in it induced for private corporate investment. 

While this continues unabated, increasing demand for residential properties, supported by responsive housing loan financing, has given a fillip to construction activity and the property markets. 

The second is the firming of industrial activity, substantiated by recent data and credible perception surveys. Improving corporate balance sheets and their fledgling investment activity, supported by a strong and emerging banking system and financial market makes this outlook brighter.

The major macroeconomic concomitants of growth have also generally remained robust, it said.

"Inflationary pressures have eased significantly in September, confirming that the spikes in the previous two months were temporary, caused by seasonal and weather-driven supply constraints in a few food items. Downside risks, especially emerging from the vagaries of rainfall and global headwinds are however non-negligible," the review said.

Yet, the smooth downward trajectory observed in core inflation is likely to keep the headline inflation within the target band, it noted significantly.

The fiscal position of the Union government remains solid with steady revenue growth, especially in direct taxes, and prudent rationalisation of revenue expenditure which has enabled the front-loading of capital expenditure while keeping the market borrowing programme tied to the budgeted target," the review noted.

Employment trends are encouraging. While the labour force participation rate is improving steadily, the unemployment rate is declining. The results for the first quarter of 2023-24 for the urban segment signalled the continuation of the salutary trends in 2022-23.

Underlining the improvement in the overall labour force participation lies the uptick in female participation, a phenomenon continuously at work in the past six years. 

The Nari Shakti Vandana Adhiniyam 2023 is a landmark legislation that can even further catalyse women-led development.

India’s external account remains robust despite a slowdown in global demand. On a YoY basis, the current account balance and its components, viz, merchandise trade and invisibles have performed better in the first 2023-24. 

In September 2023, imports moderated much sharper than exports, improving the overall trade balance significantly on a YoY basis. 

In the first half of 2023-24, net foreign portfolio investment inflows remained substantially positive as against net outflows in the first half of 2022-23.

The forex position also remains comfortable, the document noted further.

While domestic macro-fundamentals are strong and improving, downside risks arise from global headwinds and uncertainties in weather conditions. 

Be that as it may, the RBI’s forward-looking surveys which show optimism about demand conditions, employment opportunities and industrial output, have attested to India’s growth prospects for the current fiscal.