India’s economy is expected to comfortably surpass the government’s growth estimate of 6.5 per cent in FY24, the Finance Ministry said in its half-yearly economic review report, released on December 29.
The Finance Ministry said the momentum the Indian economy gained in the second quarter of FY24 is likely to be sustained in the following December quarter of the fiscal year.
Apart from this, the ministry said that the growth in consumption demand is also expected to be sustained.
In the half-yearly economic review 2023-24 report, the Finance Ministry mentioned that the real GDP grew by a healthy 7.7 per cent in H1 of FY24, following a 7.6 per cent growth in Q2.
Citing the reasons for the growth, the ministry said strong domestic consumption and investment drove the GDP growth in H1 of FY24. Private Final Consumption Expenditure (PFCE) registered a growth of 4.5 per cent, with its share in GDP increasing to 60.4 per cent, the highest in H1 since FY12, barring the pandemic year FY21′.
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“The better-than-expected growth in Q2 of FY24 and the emergence of India as the fastest-growing major economy in H1 of FY24 have improved the growth prospects and prompted various domestic and international agencies to upgrade GDP growth projections for FY24,” the report noted.
“The relatively stable Indian rupee and adequate foreign exchange reserves generate optimism for India’s external sector,” the report observed.
On Inflation
On the inflation front, “with the stable downward movement in core inflation and continuing deflation in fuel inflation, the headline inflation outlook is on a declining trend, notwithstanding temporary disruptions from food prices. RBI has projected inflation to average at 5.4 per cent in FY24”.
As per the latest consumer price index data, the inflation rate was recorded at 5.6 per cent in November 2023, with stable core inflation at 4.1 per cent but elevated food inflation at 8.7 per cent. The government said higher food inflation was mainly due to inflation in some vegetables, pulses, spices, and fruits.
On employment:
Stating that rising employment opportunities highlight better growth prospects for India, the report said, “Urban unemployment rate declined from 7.2 per cent in Q2 of FY23 to 6.6 per cent in Q2 of FY24. This brings the urban unemployment rate down from 7.4 per cent in H1 of FY23 to 6.6 per cent in H1 of FY24.”
The ministry also added that the net payroll additions under EPFO witnessed a year-on-year growth of 18.9 per cent in H1 of FY24, with growth being broad-based across all age groups. Exit from the EPFO net was 72.6 per cent lower in H1 of FY24 compared to the corresponding period of the previous year.
Revenue collections:
Regarding revenue collections from April to October 2023, the government said, “The net tax revenue of the Government in Apr-Oct 2023 rose by 11.2 per cent year-on-year to reach ₹13 lakh crore. The direct taxes have registered a robust collection during the year, with a 17.4 per cent YoY growth in corporate taxes and a more than 30 per cent YoY growth in personal income taxes.”
On indirect taxes, GST collections continued to reflect the momentum in economic activity. “The monthly Gross GST collection for all the months of FY24 has been much higher than that recorded in the corresponding months of the last fiscal year. For November 2023, the gross GST collection at ₹1.68 lakh crore was 12 per cent higher on a YoY basis,” the official document said.
Trade deficit:
During H1 of FY24, merchandise exports contracted by 8.8 percent. “Across countries, India’s exports to the USA, the UAE, China, Hong Kong, Singapore, and Saudi Arabia declined, whereas exports to the UK and the Netherlands increased. The net of service trade in H1 of FY24 increased by 15.5 per cent (on a YoY basis),” the report said. India’s overall trade deficit reduced to almost half at $39.9 billion in H1 of FY24 as compared to $75.3 billion in H1 of FY23.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
