Finance Minister Nirmala Sitharaman presented the Economic Survey in Parliament, forecasting India's GDP growth rate to be between 6.5% and 7% for 2024-25, signaling a robust economic outlook. According to the survey, global economic growth is anticipated to be 3.2% in 2023, based on the April World Economic Outlook. The survey highlights divergent growth patterns across countries due to varying domestic structural issues, inconsistent exposure to geopolitical conflicts, and the effects of monetary policy adjustments.
India has managed to carry over the positive momentum from FY23 into FY24, despite numerous external obstacles. In FY24, India’s real GDP expanded by 8.2%, surpassing the 8% growth threshold in three out of four quarters. This achievement was supported by a focus on maintaining macroeconomic stability, which minimized the impact of external challenges on the economy.
The government's emphasis on capital expenditure and sustained private investment has enhanced capital formation growth. Gross Fixed Capital Formation saw a 9% increase in real terms during 2023-24.
Looking ahead, healthier balance sheets for corporations and banks are expected to further bolster private investment. The positive developments in the residential real estate market suggest significant growth in household sector capital formation, as noted in the survey.
Inflationary pressures caused by global issues, supply chain disruptions, and unpredictable monsoons have been effectively managed through administrative and monetary policy measures. Consequently, retail inflation, which averaged 6.7% in FY23, decreased to 5.4% in FY24.
Despite the expansionary public investment, fiscal balances have progressively improved. Enhanced tax compliance due to procedural reforms, expenditure discipline, and increased digitization have contributed to this balanced fiscal position.
The external balance faced pressure from weakened global demand for goods; however, strong services exports helped offset this. As a result, the Current Account Deficit (CAD) improved to 0.7% of GDP in FY24, compared to a deficit of 2.0% of GDP in FY23.
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