Economic Survey 2022-2023 projects baseline real GDP growth of 6.5% in FY24

The Economic Survey for the 2022-2023 fiscal pegged the real gross domestic product (GDP) growth for the upcoming 2023-2024 financial year at 6.5 percent, confirming CNBC-TV18 newsbreak on Tuesday.

"The survey projects a baseline GDP growth of 6.5 percent in real terms in FY24. The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI, domestically. The actual outcome for real GDP growth will probably lie in the range of 6 percent to 6.8 percent, depending on the trajectory of economic and political developments globally," the survey said.

The Economic Survey tabled by Union Finance Minister Nirmala Sitharaman ahead of the Budget presentation on Wednesday projects FY24 nominal GDP growth of 11 percent.

The government survey  highlights the state of the economy in the current financial year shall flag global economic situation as a key risk factor for FY24 growth forecast. Among the key factors responsible for growth will be private consumption, higher capex and vaccination.

According to the Economic Survey, for FY23, India has sufficient forex reserves to finance the current account deficit (CAD) and intervene in the forex market to manage volatility in the rupee. The survey also points at visible incipient signs of a new private capital formation cycle.

India has made a relatively speedy recovery post pandemic, and in FY24, capital investment and strong domestic demand will boost growth, the Economic Survey 2023 noted. New private sector capital formation cycle is clearly visible while the government’s raised capex is compensating private sector’s caution, the survey said.

It said that inflation may prolong while borrowing cost may remain higher in the next fiscal. Commodity prices shall moderate but still remain above pre-war (Ukraine-Russia) levels. However, inflation challenge in FY24 must be a lot less stiff than it has been this year, as per the survey. 

The rise in imports amid high commodity prices will have a negative impact on CAD. Also, the currency may be under pressure if CAD widens further, the survey noted. High commodity prices are likely to continue to put pressure on import costs and export growth could plateau on poor global demand, it added.

The Economic Survey expressed caution on CAD as it needs monitoring while the manageable external situation could help India sail through CAD and currency concerns.

The survey added that the impact of China reopening after the COVID-19 pandemic is neither significant nor persistent in India. Also, capital flows are likely to return as monetary tightening abates.

The Economic Survey is the government's review of how the economy fared in the past year. The survey by Chief Economic Adviser V. Anantha Nageswaran was tabled in the parliament on Tuesday by Finance Minister Nirmala Sitharaman, a day before she presents the Budget for the 2023-2024 fiscal.

Later, the Chief Economic Advisor will hold a press conference along with other senior officials of the finance ministry.