India’s GDP to grow 6.5-7% in 2024-25

Context

The Economic Survey 2023-24, presented by Finance Minister Nirmala Sitharaman, projects India’s economy to grow at a steady pace of 6.5-7% in the current fiscal year (FY24). This optimistic outlook is based on the country’s strong economic fundamentals, resilience in the face of global challenges, and targeted policy interventions. The survey highlights key sectors that are expected to drive growth and outlines the government’s strategy for achieving sustainable development.

Macroeconomic Indicators

• GDP Growth: The Economic Survey projects a conservative real GDP growth of 6.5-7% for FY24, aligned with the IMF’s 7.8% forecast. The Chief Economic Advisor suggests the growth could reach 8% due to strong momentum.
• Inflation: Retail inflation is expected to decline to 5.4% in FY24, with the RBI forecasting a further drop to 4.5% in FY25. The Chief Economic Advisor anticipates inflation could settle around 4% if monsoon conditions are favorable.
• External Sector: India is the top global remittance recipient with $120 billion in 2023. Its services exports make up 4.4% of global commercial exports, with a 6% share in digitally delivered services exports.

Sectoral Performance

• Agriculture and Allied Sectors: Average annual growth of 4.18% over five years, with allied sectors like animal husbandry and fisheries boosting farm incomes. Investment in agricultural research yields ₹13.85 for every rupee spent.
• Manufacturing and Industry: PLI schemes have attracted ₹1.28 lakh crore in investment, supporting ‘Aatmanirbhar Bharat.’ The pharmaceutical industry is the world’s third-largest at $50 billion.
• Services Sector: Services exports have grown, with a 6% share in digitally delivered services. The e-commerce industry is expected to surpass $350 billion by 2030, and tourism is recovering with 92 lakh foreign tourists in 2023.
• Infrastructure: Significant investment in infrastructure, with National Highway construction increasing to 34 km per day and a 77% rise in Railways’ capital expenditure. New terminal buildings have been opened at 21 airports.

Policy Initiatives

The Economic Survey highlights six key focus areas for the government during the ‘Amrit Kaal’ (period of 25 years leading up to India’s 100th year of independence):

• Boosting private investment
• Expanding the MSME sector
• Utilizing agriculture as a growth engine
• Financing the green transition
• Bridging the education-employment gap
• Capacity building of states

The government has also launched initiatives such as the Pradhan Mantri Awas Yojana (PMAY) for affordable housing and the Ayushman Bharat scheme for universal healthcare coverage.

Challenges and Risks

While the economic outlook remains positive, the survey also acknowledges potential challenges and risks:

• Geopolitical tensions: Ongoing conflicts and trade disputes could impact global growth and India’s exports.
• Commodity prices: Rising commodity prices, particularly oil prices, could dampen profitability in some industrial sectors.
• Monsoon dependence: Agriculture remains vulnerable to variations in monsoon rainfall, which could affect overall growth.
• Skill gaps: Bridging the gap between education and employability remains a key challenge for the country.

Conclusion

The Economic Survey 2023-24 projects India’s GDP growth at 6.5-7% in FY24, driven by strong macroeconomic fundamentals, resilience to global challenges, and targeted policies. However, vigilance is needed to address risks like geopolitical tensions, commodity price fluctuations, and skill gaps. The successful implementation of these policies is crucial for equitable economic growth and India’s goal of becoming a developed nation by 2047.

Source: The Indian Express