New Delhi, Feb 23,2023: Despite the global economy operating under an extremely challenging macroeconomic environment like the geopolitical tensions in Europe, spiralling energy, food and fertiliser prices, monetary tightening and inflationary trends having elevated the downside risks to the global economic outlook, the Indian economy is estimated to grow by 7 per cent year-on-year in the current fiscal.

The monthly economic review for January 2023 released by the finance ministry on Thursday, said that the measures announced in the union budget like a rise in capital expenditure, increased focus on infrastructure development, boost to the green economy, and initiatives for strengthening financial markets are expected to promote job creation and spur economic growth.

“Measures announced for the MSME sector will likely reduce the cost of funds and aid small enterprises. Revision in tax slabs under the new personal income tax regime is expected to boost consumption, thus providing more impetus to economic growth,” it noted.

In addition to this, easier KYC norms, expansion of DigiLocker services, and overall impetus on digitisation and last-mile connectivity are predicted to strengthen financial markets, the survey noted further.

Thanks to the emphasis on macroeconomic stability in the last several years, the Indian economy faces the year ahead with confidence while being mindful of the risks, the survey emphasised.

“The last three years have seen the global economy endure a health crisis and a debilitating (ongoing) conflict in Europe. Governments and central banks of advanced and emerging market economies responded to the consequent economic challenges, first with stimulus and later with restrictive policies,” the document pointed out.

The rise in economic uncertainties is reflected in the unevenness of performance of the global economy in 2022, it noted.

“During the fourth quarter of 2022-23, various high-frequency indicators (HFIs) pointed towards a slowdown in general, as monetary tightening appeared to have started weakening global demand. This may continue in 2023 as various agencies have forecasted a decline in global growth. Apart from the lagged impact of monetary tightening, the uncertainties emanating from the lingering pandemic and relentless conflict in Europe may further dampen global growth,” the survey observed.

However, it added that “Even as global output is expected to slow, the IMF and the World Bank project India to be the fastest-growing major economy in 2023”.