According to the National Statistical Office (NSO) India’s gross domestic product may expand at a higher-than-expected rate of 7.3% in real terms in the current fiscal, compared with 7.2% last year. The estimate is made on the basis of the national income data computed for the first half of the year and several high-frequency indicators for the October/November period. However this advance estimate may undergo significant revisions later in the light of robust data.
According to NSO, investment pace is expected to gather incremental momentum in the second half, taking the share of gross fixed capital formation in GDP to close to the coveted figure of 35% in FY24, the highest level in the current series with base year 2011-12. The growth of consumption, the largest part of the GDP from the expenditure side, is, however, seen to grow at just 4.4% on year in H2, compared with 4.5% in H1. GDP at current prices or nominal GDP is seen to grow at just 8.9% in the current fiscal.
Responding the International Monetary Fund’s forecast of general government debt overshooting 100% of the GDP under a worst-case scenario by FY28, the finance ministry has recently stated the Centre is “on track to achieve its stated fiscal consolidation target” of reducing fiscal deficit below 4.5% by FY26.
Manufacturing sector’s growth for FY24 is seen at 6.5% as compared to 1.3% in FY23, although this would still mean the tempo seen in H1 (9.3%) can’t be maintained in H2 (3.9%). Experts are of the view that the Centre may fall short of its budgeted capex target meaning GFCF’s growth this year may be lower than projected by the NSO in the first advance estimate. The construction sector’s growth is seen by the NSO at 8.3% in FY24, lower from 9.0% in FY23; and the agriculture sector’s is seen at 1.8% compared with 4%.
On the expenditure front, private final consumption expenditure, as shown by the private final consumption expenditure (PFCE), is projected at 4.4% in FY24, lesser than 7.5% in FY23, and government final consumption expenditure’s (GFCE) growth is seen at 4.1%, sharply higher than 0.1% last year.
