Growth Momentum To Continue As Lower GST Rates Support; Global Uncertainty Poses Risks: Sept Economic Review

India's growth momentum will continue because of improving domestic demand, lower inflation, monetary easing, the Ministry of Finance said in its monthly economic review for September.

Recent policy measures, including GST rate rationalisation, will likely keep inflation under control while it boosts demand in the economy. The Finance Ministry expects that the overall prices will remain soft in the remaining part of the ongoing financial year.

On the agricultural front, sowing of cereal and pulses recorded a healthy growth at the end of Kharif sowing season, which displayed a favourable growing condition, the report said. The overall food production outlook remained strong despite a decrease in oilseeds and cash crop sowing and crop damages.

Lower GST rates will probably support a positive demand outlook as it will reduce tax burden on consumers and businesses. The indirect tax reform will also stimulate consumption and investment across sectors and employment generation in the economy, according to the report.

Domestic demand condition will also get a boost from strong performance of industries and services sector along with stable labour markets, the report said.

However, the Finance Ministry expressed concerns about external demand because of global uncertainty. It presents downside risks to growth outlook.

Implementation of various growth-enhancing structural reforms and government initiatives are likely to mitigate some of the negative impact of the external challenges.