The Indian economy is on track to grow at a rate of 6.7% to 7% in the fiscal year ending March 31, 2024, according to several economists who revised their projections following the release of robust growth data for the July-September quarter. The country’s economy expanded by 7.6% during this period, surpassing earlier estimates of a 6.8% rise.
The stronger-than-expected growth in the first half of the fiscal year, coupled with ongoing government spending and a revival in private investment, has led economists to revise their growth forecasts beyond the government’s estimate of 6.5%. Saumya Kanti Ghosh, Chief Economist at the State Bank of India, noted that with 7.7% real GDP growth in the first half of 2023-24, the overall growth for the full fiscal year could be around 7%, possibly exceeding the 7% mark.
While the government has maintained its growth forecast at 6.5%, Chief Economic Advisor V. Anantha Nageswaran expressed comfort with the possibility of an upside to this projection. Citigroup revised its growth forecast for the financial year upward by 50 basis points to 6.7%, citing a pick-up in investment activity.
Chief India Economist noted on gross value added
Gross fixed capital formation, an indicator of investment, increased by 11% in the July-September quarter, reaffirming expectations of sustained investment recovery. Samiran Chakraborty, Chief India Economist at Citigroup, noted that the growth in construction gross value added and strong gross fixed capital formation data suggest both public and private capex recovery.
DBS has raised its growth projection for the current financial year to 6.8% from 6.4%, reflecting a broad-based improvement in investments. Economist Radhika Rao highlighted the positive impact of higher state and central spending, recovery in the real estate sector, and inventory demand ahead of festivities. However, concerns persist over weak consumption growth, particularly in rural areas, indicating that certain parts of the economy are yet to fully recover.
The encouraging economic performance comes amid global uncertainties, showcasing India’s resilience and potential for sustained growth. Economists remain optimistic about the country’s economic trajectory, emphasizing the need for policy measures to address specific challenges and foster inclusive growth.