India's Fiscal Policy FY2024

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Questions and Answers

What has been the trend in fiscal policy stance regarding capital expenditure as a percentage of GDP?

No significant change since FY2020

Consistent decline over the years

Increase without any consolidation

Gradual consolidation with higher allocations (correct)

Which fiscal year showed the highest gross fiscal deficit as a percentage of GDP?

FY20

FY24

FY21 (correct)

FY22

What is indicated about the capital expenditure trend in relation to GDP from FY20 to FY24?

Decreased steadily each year

Fluctuated without a clear direction

Increased every fiscal year (correct)

No change in capital expenditure

Which of the following best describes the relationship between gross fiscal deficit and GDP as seen from the figures?

A consistent fiscal deficit affects the overall GDP growth negatively Signup and view all the answers

Which fiscal year represents the lowest capital expenditure percentage among the options provided?

FY20 Signup and view all the answers

How have government economic policies influenced the fiscal deficit trend in recent years?

Stabilization and gradual consolidation of the fiscal deficit Signup and view all the answers

In the context of fiscal deficit, what can be inferred about the country's economic health?

A growing fiscal deficit is generally a sign of economic decline Signup and view all the answers

Considering the information, what is one of the major implications of a rising fiscal deficit?

Increased public debt burden Signup and view all the answers

What can be deduced about capital expenditure strategies from FY20 to FY24?

Consolidation with targeted capital initiatives Signup and view all the answers

Which fiscal year indicated a decrease in capital expenditure as a percentage of GDP?

FY21 Signup and view all the answers

What was the percentage decrease in global merchandise trade in 2023?

1.2% Signup and view all the answers

What was the growth rate of world output in 2023 compared to 2022?

3.3% Signup and view all the answers

By how much did foreign direct investment to developing economies decline in 2023?

9% Signup and view all the answers

Which of the following sectors experienced a trade volume contraction in 2023?

Goods Signup and view all the answers

What was the projected change in world trade volume for goods and services for 2024?

3.1% Signup and view all the answers

Which region's economies saw a decrease in growth from 2022 to 2023?

Advanced economies Signup and view all the answers

What was the growth rate of world consumer prices in 2023?

6.7% Signup and view all the answers

Which commodity experienced the largest price drop in 2023?

Oil Signup and view all the answers

What was the global growth rate in 2023?

3.3% Signup and view all the answers

Which factors contributed to the resilience of global growth in 2023?

Improved labor force participation and decline in global food prices Signup and view all the answers

How did central banks influence the economic landscape in 2023?

They sustained a tight monetary policy to manage inflation. Signup and view all the answers

What challenge did central banks face regarding inflation in 2023?

Difficulty in achieving last-mile disinflation Signup and view all the answers

Which region is projected to experience a considerable decline in inflation in 2024?

Advanced economies Signup and view all the answers

What contributed to the avoidance of a feared global recession in 2023?

Supply-side expansion and easing of supply chain pressures Signup and view all the answers

What was the primary reason for volatility in financial markets in 2023?

Market expectations surrounding interest rate changes Signup and view all the answers

What trend is projected regarding commodity prices in 2024?

Marginal reversal after declines in 2023 Signup and view all the answers

Study Notes

Global Trade and Investment Trends

Global merchandise trade contracted by 1.2% in 2023; combined growth in goods and services was only 0.8%.
IMF reported new trade restrictions: approximately 3,200 in 2022 and 3,000 in 2023.
Foreign direct investment in developing economies fell by 9% in 2023 according to UNCTAD.
Geo-economic fragmentation is impacting trade and investment growth.

Global Economic Indicators (Growth Rates)

World output growth was 3.5% in 2022, decreased to 3.3% in 2023, and projected at 3.2% in 2024.
Advanced economies experienced a significant slowdown, with growth declining from 2.6% in 2022 to 1.7% in both 2023 and 2024.
Emerging markets and developing economies saw growth rise from 4.1% in 2022 to 4.4% in 2023, with a slight dip to 4.3% projected for 2024.
World trade volume for goods and services significantly decreased from 5.6% growth in 2022 to only 0.8% in 2023; expected recovery to 3.1% in 2024.
Consumer prices globally rose from 8.7% in 2022 to 6.7% in 2023, with forecasts of a decline to 5.9% in 2024.

Commodity Price Fluctuations

Oil prices dropped by 16.4% in 2023, whereas non-oil commodity prices declined by 5.7%.
Forecasts anticipate a modest recovery in commodity prices in 2024.

Fiscal and Monetary Policies

Global growth showed resilience against high interest rates, avoiding a feared recession linked to synchronized monetary tightening.
Factors contributing to resilience include labor force participation improvement, supply chain easing, and declining global food prices.
Headline inflation decreased from 2022 peaks but remained above central bank targets, complicating disinflation efforts.
Financial markets responded to changes in monetary policy expectations, contributing to volatility in yields and term premia.

Future Projections

IMF predicts a marked decline in inflation for advanced economies in 2024, while emerging markets may experience persistent inflation challenges.
Commodity price dynamics are expected to slightly reverse in 2024, following declines in 2023.

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Description

This quiz covers the fiscal policy stance of India for the financial year 2024, focusing on consolidation and capital expenditure. Analyze trends in gross fiscal deficits as they relate to GDP percentages. Test your knowledge on key economic policies and their implications for the nation.