In a testament to its resilient economy, India has shattered growth projections, cementing its position as the world's fastest-growing major economy. The latest GDP data paints a picture of remarkable progress, with the nation's economy expanding at a robust 7.8% in the January-March quarter and clocking an impressive 8.2% growth rate for the entire fiscal year.
India's Q4 FY24 GDP data has been released
These stellar figures have surpassed even the most optimistic predictions, including those by the International Monetary Fund and India's own central bank, which had anticipated growth rates between 7% and 8%. The stellar performance can be attributed to the robust performance of key sectors such as manufacturing, mining, construction, and services, all of which have exhibited robust growth trajectories.
A Timely Boost for the Incumbent
For the incumbent government, these impressive economic figures come as a resounding endorsement of their policies, arriving at a fortuitous time as the nation prepares for the final phase of the general elections. The strong growth numbers provide a much-needed tailwind for the ruling party, potentially swaying undecided voters in their favor.
Beyond the headline growth figures, India's fiscal position has also shown remarkable improvement. The nation has reported a fiscal deficit of 5.6%, lower than the targeted 5.8%, indicating a narrowing gap between government expenditure and revenue. This fiscal consolidation, coupled with the government meeting its revenue and tax collection targets, underscores the prudent management of public finances.
Ambitious Targets on the Horizon
Looking ahead, the government remains steadfast in its commitment to fiscal consolidation. India's Finance Minister, in the latest budget speech, outlined an ambitious goal of reducing the fiscal deficit below 4.5% by 2025-26. With the current trajectory, the administration appears well-positioned to achieve this target, setting the stage for long-term economic stability.
Economists Responds
The country's leading economists, including Former NITI Aayog Vice Chairman Rajiv Kumar, on Friday, May 31, hailed the GDP growth rate of 8.2% in FY24, which was 'above all estimates and forecasts'. Kumar said this is the third year in which India has grown at over 7%, outpacing all other large economies. India's economy grew 7.8% in the March quarter, pushing up the annual growth rate to 8.2%, according to official data released on Friday.
"Well Done India! FY24 GDP growth comes in at 8.2% well above all estimates and forecasts. This is the third year in which the Indian economy has grown at 7%+ outpacing all other large economies. Mfg and mining sectors recorded strong growth," Kumar said in a post on X.
India's G20 Sherpa Amitabh Kant also said India continues to reinforce its position as the fastest-growing large economy in the world.
"The latest estimates for FY24 reveal a remarkable Real GDP growth of 8.2%, surpassing the 7.0% growth in the previous year. This exceptional performance is a testament to India's robust economic momentum and resilience," Kant said.
"Once again defying expectations, India's GDP for 4th quarter of fiscal year 2023-24 grew at 7.8% & the real GDP growth for FY24 stands at 8.2%. Highest among major economies… again," Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi said in a post on X.
CRISIL Ltd Chief Economist Dharmakirti Joshi said, "India's growth continues to surprise on the upside. Despite a poor showing by agriculture, provisional estimates peg India's GDP growth for fiscal 2024 at 8.2%. This beats the 7.6% growth estimated by National Statistical Office in February."
"GDP growth of 8.2% for 2023-24 and 7.8% in the last quarter of the fiscal has beaten even optimistic expectations, helped by a stellar performance of manufacturing, which is expected to sustain momentum in the current financial year as well," Assocham Secretary General Deepak Sood said.
Aditi Nayar, Chief Economist, Head of Research and Outreach at ICRA Ltd, said, "While the growth in India's GDP and GVA moderated to a four-quarter low of 7.8% and 6.3%, respectively, in Q4 FY2024 from the revised prints of 8.6% and 6.8% in Q3, it exceeded both our and market expectations." The wedge between the two narrowed only slightly to 148 bps from 178 bps in Q3, amid the high 22.2% growth in net indirect taxes in real terms, she said.
"With such a high growth of net indirect taxes unlikely to sustain in FY25, we expect GDP and GVA growth to print closer to each other, especially in terms of the annual numbers," Nayar said.
Conclusion
India's economy is on a remarkable growth trajectory, driven by key sectors such as manufacturing, mining, construction, and services. This stellar performance not only surpasses forecasts but also strengthens the incumbent government’s position as the nation heads into the final phase of general elections. With a fiscal deficit lower than anticipated and ambitious targets for further fiscal consolidation, India is well-positioned for sustained economic stability and continued growth in the coming years. The impressive economic progress underscores the resilience of India's economy and sets the stage for long-term prosperity.
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