India’s GDP for FY24 surpasses the optimistic estimates made by both the government and private agencies
India’s real GDP grew by an impressive 8.2% during 2023-24, surpassing even the most optimistic estimates from both government and private agencies. The National Statistical Office (NSO) released this estimate on May 31, 2024, exceeding the second advance estimate of 7.6% and the previous year’s growth of 7%. GDP growth was consistent throughout the year, with over 8% growth in each of the first three quarters and 7.8% in the last quarter. This marks the third consecutive year with real GDP growth of 7% or more.
The robust GDP growth in 2023-24 was primarily driven by investment spending, with gross fixed capital formation (GFCF) growing at 9% in real terms, compared to a 6.6% increase in 2022-23. This surge was mainly fueled by higher capital expenditure from both central and state governments, focusing on infrastructure development and public projects.
Looking ahead, sustaining this momentum will depend on continued government support, especially in the form of infrastructure spending. Additionally, efforts to stimulate private sector investments and enhance consumption demand will be crucial for maintaining growth momentum.
Government spending has played a significant role in driving India’s growth in FY24
Government spending has been important in driving GDP growth in FY24. We anticipate that India will grow by more than 7% in FY25, with growth this time being driven by a revival in private capital expenditures.
The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.13 lakh crore and ₹11.75 lakh crore, respectively, which will be lower than in 2023-24. With private investments happening at scale, the reduced borrowings by the Central Government will facilitate greater availability of credit for the private sector.
Having said that, uneven consumption demand and obstacles in the export sector will be headwinds to the overall growth in FY25.
Growth projections in 6.6-7.2% range for FY25
Projections for India’s real GDP growth in 2024-25 by various multilateral agencies, rating agencies, and independent forecasters now range from 6.6 percent to 7.2 percent. The GDP growth in the last quarter of 2023-24 surpassed expectations, reaching 7.8 percent, which elevated the overall GDP growth for the fiscal year to 8.2 percent.
This unexpectedly high performance has led to upward revisions in growth projections for 2024-25, although these projections remain lower than the growth achieved in the previous fiscal year.
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