India's GDP To Grow At 6-6.8 Per Cent In FY24: Economic Survey 2023

Finance Minister Nirmala Sitharaman on Tuesday (31 January) tabled the Economic Survey 2022-23 in the Parliament.

The Economic Survey projects the Indian economy to grow at 6-6.8 per cent in the financial year 2023-24.

"The actual outcome for real GDP growth will probably lie in the range of 6.0 per cent to 6.8 per cent, depending on the trajectory of economic and political developments globally," the Economic Survey said.

According to the Survey, the upside to India’s growth outlook arises from:

(i) Limited health and economic fallout for the rest of the world from the current surge in Covid-19 infections in China and, therefore, continued normalisation of supply chains;

(ii) Inflationary impulses from the reopening of China’s economy turning out to be neither significant nor persistent;

(iii) Recessionary tendencies in major AEs triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent; and

(iv) This leading to an improvement in animal spirits and providing further impetus to private sector investment.

"Against this backdrop, the survey projects a baseline GDP growth of 6.5 per cent in real terms in FY24. The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI, domestically," the Survey said.

The survey noted that India’s recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment.

"The current growth trajectory will be supported by multiple structural changes that have been implemented over the past few years," it said.

The private sector – financial and non-financial – was repairing balance sheets, which led to a slowdown in capital formation in the previous decade.

"The financial system stress experienced in the second decade of the millennium, evidenced by rising nonperforming assets, low credit growth and declining growth rates of capital formation, caused by excessive lending witnessed in the first decade-plus, is now behind us," the survey said.

Aided by healthy financials, incipient signs of a new private sector capital formation cycle are visible. More importantly, compensating for the private sector’s caution in capital expenditure, the government raised capital expenditure substantially, it said.

"Budgeted capital expenditure rose 2.7X in the last seven years, from FY16 to FY23, re-invigorating the Capex cycle. Structural reforms such as the introduction of the Goods and Services Tax and the Insolvency and Bankruptcy Code enhanced the efficiency and transparency of the economy and ensured financial discipline and better compliance," the Survey added.