NSO projects India's FY24 GDP growth at 7.3% - decoding the numbers
The first advance forecast for India's gross domestic report (GDP) released by the National Statistics Organisation (NSO) is higher than the Reserve Bank of India’s (RBI) 7% forecast. CNBC-TV18 had estimated growth at 6.8%.
The National Statistics Organisation (NSO) has released its first advance forecast for India's gross domestic report (GDP) growth in financial year 2024 (FY24), expecting the economy to grow at 7.3%, higher than the Reserve Bank of India’s (RBI) latest 7% forecast. CNBC-TV18 had estimated growth at 6.8%.
The RBI had forecast a growth of 6.5% in their first estimate in April 2023. However, the Street was not as optimistic back then, projecting growth at only 6%. This has led to multiple upward revisions of late.
What does this mean for the Budget? The advance estimates are released to ensure that the Budget keeps the fiscal deficit target, which was set at 5.9% for FY24. Now, in nominal terms -- inflation plus real -- the GDP growth is slower, at 8.9% versus the estimated 10.8% growth. So, the GDP value is at ₹296 lakh crore as of March 31 versus the expected ₹302 lakh crore. This means that the fiscal deficit will now have to be lower by around ₹37,000 crore compared to the Budget.
The headline revision by the NSO has been possible largely because of the robust industry growth at 7.9%. This has been aided by growth of over 8% in electricity and mining, and in services at over 7.7%. Within services, finance did well at 8.9%. And all this is also buttressed from the expenditure side by the huge government capital expenditure, which is growing at 10.3%. It has been growing in double-digit for the 2-3 years, which augurs well.
There are also some challenges. The growth in the employment-heavy sectors has been slow, with agriculture and allied services, horticulture, and forestry, growing at just 1.8%. Within services, trade, hotels, and transport are growing at only around 6.3%, much lower than the overall growth rate.
Also, while the capital expenditure is pushing up the economy, consumption has not been good, growing by only 4.4%. This means the growth is not trickling down and leading to overall improvement in consumption. If consumption continues to lag, the capex might stop at some point, which could become a worry.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Jan 8, 2024 2:17 PM IST
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