The country’s growth slowed down significantly in the last couple of years. The global financial crisis coupled with poor management of key financial institutions resulted in an economic downturn in India. Many people feared that the country would follow other developing nations such as Venezuela, Argentina, and Turkey and enter a recession.
However, there are some positive developments as well which indicate that India is not completely out of the woods just yet.
India's Financial Situation in 2022 is getting better
The financial health of a country reflects in the sovereign credit rate. Rating agencies assess the financial health of a country and its ability to repay the debt. In 2022, the credit rating of India is expected to improve a bit. This is primarily due to the fact that the country’s debt-to-GDP ratio is expected to come down significantly. The debt-to-GDP ratio is currently at 89.6%. Experts believe that this is one of the main reasons why the credit rating of India is low. It is expected to come down even more. This is a positive development that indicates that the country’s financial situation is getting better.
India's Consumer Inflation in decreasing
Consumer inflation is a critical economic indicator that is a major concern for the government. The government has been trying its best to control the inflation rate. The inflation rate in the country was as high as 7% in the month of June 2022. Inflation also has a psychological component. When people do not have confidence in their economy, they are more likely to postpone their purchases. This, in turn, affects production and investment, which play major factorsin economic growth. However, there is an indication that might prove the changing situation. During the month of July, India’s consumer inflation decreased to 6.7%.
India's GDP is Increasing
The value, in terms of money, of all the produced goods and provided services over the course of a specific time frame is referred to as that nation's gross domestic product (GDP).It is one of the primary measures that is used to evaluate how healthy is a country's economy. The GDP of India has been below expectations for quite some time now. The GDP of India is expected to be above 7.4% by 2022. It is an indication that the country's overall financial condition is getting better.
India's PMI is increasing
The purchasing managers’ index (PMI) is an economic indicator that is used to measure the health of the manufacturing sector. It provides an initial analysis of the current state of business circumstances in manufacturing.The PMI for India was 53.9 in June and in July it raisedto 54.6, which indicates that the manufacturing sector is doing well. This ought to serve as a very encouraging omen for the government. This indicates that the manufacturing sector is doing well. If this sector continues to do well, then it will lead to an increase in the overall growth rate of the economy.
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