GOVT EYES 7% GROWTH FOR FY25: ECONOMISTS

Even as curtains come down on the election campaign and the Modi Government exits FY24 with India positioned as the fastest-growing major economy in the last financial year, riding on a growth juggernaut of 8.2 per cent, growth prospects are already appearing bright, with high-frequency Indicators for April 2024 signalling a good start to Q1FY25.

Broadbased growth, driven by robust demand and investment activity, forecast of a normal monsoon that bodes well for the agricultural sector, upbeat business and consumer sentiments, strong corporate and bank balance sheets, continued capex push and strategic trade agreements underlining India's commitment to expanding its global trade footprint are setting the stage for India to sustain the growth momentum with Government projecting India to grow by 7 per cent in FY25.

However, the GDP growth for Q4 FY24 at 7.8 per cent has come as a surprise for economists like Sunil Kumar Sinha, Senior Director and Paras Jasrai, Senior Analyst at India Ratings and Research. "It was much higher than Ind-Ra projection of 6.2 per cent," say Sinha and Jasrai, pinning down the reason to net taxes received by the Government. The net taxes which grew at 7.9 per cent yoy and 12.7 per cent yoy in QIFY24 and Q2 FY24, grew at 31.2 per cent yoy and 22.2 per cent yoy in Q3 FY24 and Q4 FY24. "This is due to robust economic activity and higher corporate profitability. It appears that non-pass through of lower input cost has resulted in higher corporate profitability and in turn higher payment of taxes," the economists said.

Rumki Majumdar, Economist, Deloitte India also agrees that GDP surprised to the upside, thanks to strong growth in manufacturing and robust buoyancy in the services sector. "India's growth continues to surprise on the upside," says Dharmakirti Joshi, Chief Economist, CRISIL who notes provisional estimates of GDP growth for fiscal 2024 at 8.2 per cent despite a poor showing by agriculture. "This beats the 7.6 per cent growth estimated by National Statistical Office in February. Although real GDP is still around 7.5 per cent, below where it would have been without the pande mic, domestic strengths and policy focus have put the economy on a healthy growth trajectory and is trimming the permanent loss of GDP from the pandemic," notes Joshi.