HEALTHY AND RARING TO GO

Indian economy shows healthy growth, boding well for the future

The first quarter (April to June) of this fiscal has brought encouraging news for India’s economy - the country’s GDP expanded by 7.8%, which was a four-quarter high. This figure was better than expected and augurs well for the financial year 2023-24 (FY24).

There are challenges ahead, but unless something drastic hits the Indian economy, the country seems well-positioned to achieve a 6% or even a slightly higher GDP growth this fiscal year.

India’s Chief Economic Advisor (CEA), Mr. V. Anantha Nageswaran, said that India’s quarterly GDP growth was way higher than the GDP print of many economies. He added that the government was confident of achieving a 6.5% GDP growth this fiscal year.

Claiming that the government’s capital expenditure push was “paying off” and crowding in private investment, the top Finance Ministry official said that the main propeller of growth in Q1 was the services sector, coupled with an uptick in capital formation.

Buoyancy in agriculture and services, especially financial, real estate and professional services, as well as contact-intensive services of trade, hotels, and transportation, contributed healthily to the heartening Q1 FY24 performance.

In the quarter, five out of the eight key sectors registered growth exceeding 5%. Importantly, two sectors clocked higher growth compared to the year-ago period.

Financial, real estate and professional services grew by 12.2% as against 8.5% in the year-ago period, while agriculture, forestry and fishing grew at 3.5% in Q1 FY24 as against just 2.4% in the same quarter last fiscal.

India’s apex bank, the Reserve Bank of India (RBI) has pegged India’s GDP growth for this fiscal year at 6.5%, with the Q1 figure at 8%, Q2 at 6.5%, Q3 at 6%, and Q4 at 5.7%.