Finance Minister anticipates India's GDP growth to comfortably surpass 6.5% in FY24

30 Dec, 2023

Finance Minister anticipates India's GDP growth to comfortably surpass 6.5% in FY24

India's Finance Ministry, in its half-yearly economic review report released on December 29, expressed confidence that the nation's GDP growth in the fiscal year 2023-24 will comfortably surpass the initially projected 6.5%. Officials from the Department of Economic Affairs highlighted that despite external risks impacting growth and stability, India is poised to achieve a growth rate exceeding 6.5% in the stated fiscal year.

The statistics ministry's data for July-September revealed India's GDP growth rate at an impressive 7.6%, significantly surpassing economists' expectations of 6.8%. Subsequently, the Reserve Bank of India (RBI) revised its growth forecast for 2023-24 to 7.0%, increasing it by 50 basis points.

Although anticipation lingered regarding the Finance Ministry's adjustment in line with the upward economic trend, the ministry indicated that growth would surpass the estimated figure without specifying a revised number.

Highlighting economic indicators for October and November, the ministry reported robust activity, signaling sustained momentum in the third and fourth quarters of 2023-24. Urban consumption remains a driving force while rural demand has also exhibited significant growth, promising continued economic vigor.

However, the report acknowledged that geopolitical developments continue to affect India's external sector, contributing to a contraction in goods exports in the first half of the current financial year, aligned with a slowdown in India's key trade partners.

Regarding inflation, the Finance Ministry recognized the country's relatively high food inflation as a concern, attributing it to a global price surge rather than isolated domestic factors. Comparatively, India's 6.6% food inflation in October contrasts with higher rates in the UK (10.1%), Japan (9.8%), and South Africa (9%).

Despite the cautionary note, recent data released in December indicated a rise in India's food inflation to 8.7% in November, reflecting the ongoing challenge posed by global price escalations.