NEW DELHI: India’s post-pandemic robust economic momentum will continue for the fourth year in a row with a likely 7% expansion in the next financial year, Chief Economic Adviser V. Anantha Nageswaran said on Thursday. The growth will be supported by an expected normal monsoon, better rural demand, improved private and public investment, he said.
The second advance estimate released by the government on Thursday showed that India’s real economic growth may expand at a faster pace at 7.6% in FY24 than 7.3% projected earlier compared with 7% in FY23 and 9.7% in FY22. The economy had contracted by 5.8% in the Covid-hit FY21.
Most of the GDP growth has come about through robust non-agricultural growth on the supply side and substantial investment growth on the demand side. The main negative news on the demand side is the slowdown in consumption expenditure growth which has clocked now, only 3% for both private and government final consumption expenditure.
“With the anticipated better value addition in the farm sector next financial year, rural income and rural demand will be even better and more evident in FY25,” Nageswaran said.
“That’s because Rabi sowing has been quite good compared to last year’s flat or no change. El Nino has been predicted to be withdrawing by several international meteorological agencies.”
Besides prospects of healthy rabi harvesting, sustained manufacturing profitability and underlying service resilience to support economic activity in FY25, he said.
“Improvement in household consumption, bright prospects for capital formation owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of banks and corporates, and the government’s continued thrust on capital expenditure to drive growth,” the top finance ministry economist said.
The risks to growth next year could come from uncertainty prevailing over merchandise trade, with WTO slashing its projection for world trade growth in 2023 by half to 0.8% from its earlier estimate of 1.7% in April, he said.
Prolonged geo-political uncertainty and tightened financial conditions also pose a challenge to the growth outlook, he added.
Source: The Financial Express
