NSO's New Year surprise: 7.3% GDP growth for FY24

Advance estimates peg nominal growth at just 8.9%; yet no big fiscal concerns

- PRIYANSH VERMA

INDIA'S GROSS DOMESTIC PRODUCT (GDP) may expand at a higher-than expected rate of 7.3% in real terms in the current fiscal, compared with 7.2% last year, according to the first advance estimates released by the National Statistical Office (NSO) on Friday.

The estimate, 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, is significantly higher than forecast by most agencies, including the Reserve Bank of India (RBI), which in December raised the growth forecast sharply from 6.5% to 7%.

Expectations that growth deceleration in the second half may be marginal (with implied growth of 7%), robust goods and services tax (GST) collections, and lesser subsidy outgo, boosted the headline number.

Lack of adequate allocations for discrepancies between expenditure and production estimates of the GDP also boosted the headline figure, as the sharp rise in tax collections are yet to be reconciled with key expenditure components.

THIS WOULD MEAN the first 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.