Indian economy to grow 7.3 percent in 2023-2024: government estimates

Thanks to government investment and a recovery in the manufacturing sector, India's GDP is expected to grow 7.3% in the current fiscal year ending in March, the National Statistics Office said on Friday.

The Reserve Bank of India (RBI) raised its growth forecast to 7% last month from a previous estimate of 6.5%, and these are the first advance estimates of annual gross domestic product.

“These are early forecasts for 2023/24,” the National Statistics Office (NSO) said in a statement, noting that improved data coverage, actual tax revenues and spending on government subsidies would impact later revisions.

About 17% of GDP comes from manufacturing, which is expected to grow 6.5% year-on-year in 2023-24, up from 1.3% last year, according to the data. Meanwhile, construction output was expected to rise 10.7%, compared with 10% a year earlier.

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However, it was observed that the increase in agricultural production, which accounts for 15% of the GDP, slowed down to 1.8% in the current fiscal from 4% last year, impacting salaries in rural areas.

As compared to the provisional GDP estimate of ₹272.41 lakh crore for the year 2022-2023 released on May 31, 2023, the GDP at current prices for the year 2023-2024 is expected to be ₹296.58 lakh crore.

Nominal GDP growth for 2023-2024 is expected to be 8.9%, compared to 16.1% for 2022-2023.

S&P Global Ratings forecasts that India's largest economy will continue to grow rapidly over the next three years and will overtake Germany and Japan to become the world's third largest by 2030.

Finance Minister Nirmala Sitharaman will present the interim annual budget on February 1 and is expected to reduce the fiscal deficit from 5.9% of GDP in the current fiscal while increasing spending on infrastructure, supported by higher tax revenues.

(with contributions from agencies)