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The Indian economy is currently facing significant challenges stemming from fresh geopolitical tensions, fluctuating crude oil prices, and sluggish global demand, as stated by the finance ministry on Monday. The ministry’s Monthly Economic Review report acknowledges that domestic macro fundamentals are strong and improving, but it also highlights potential downside risks due to global uncertainties and external factors, including the recent developments in the Persian Gulf and geopolitical tensions involving Israel and Hamas. These uncertainties could lead to higher crude oil prices in the second half of the fiscal year 2023-24. Furthermore, the report points out that the relentless supply of US Treasuries and restrictive monetary policies in the US could affect global financial conditions and potentially have spillover effects on markets worldwide.

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However, despite these challenges, India’s macroeconomic outlook for 2023-24 remains positive, with strong domestic fundamentals and various growth opportunities. The finance ministry also expects India’s trade to recover in the latter half of the fiscal year, and the country maintains a comfortable level of foreign exchange reserves. The report concludes by stating that India is projected to be the fastest-growing major economy in the world in 2023-24, according to the International Monetary Fund (IMF), which forecasts a 6.3% growth rate for India’s gross domestic product this financial year, despite a slight variance from the government and RBI projections.

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