India's GDP Growth Forecasted at 7.3% for 2023-24, Exceeding RBI Projection

• 08 Jan 2024

India's National Statistical Office (NSO) recently released the first advance estimates for the 2023-24 fiscal year, projecting a real GDP growth of 7.3%, slightly higher than the 7.2% from the previous year and surpassing the Reserve Bank of India's (RBI) recent projection of 7%.

Key Points

• Economic Outlook: The NSO's advance estimates suggest a robust GDP growth of 7.7% in the first half of the fiscal year, with expectations that the second half will see growth around 6.9%-7%.
• Gross Value Added (GVA): The NSO anticipates a slight easing in GVA growth from 7% in 2022-23 to 6.9% in the current fiscal year. Nominal GDP growth is estimated at 8.9%, lower than the initial 10.5% Budget estimate.
• Concerns on Fiscal Deficit: Economists caution that the lower-than-expected growth in GVA and nominal GDP might result in the fiscal deficit exceeding the targeted 5.9% of GDP, potentially reaching around 6%.
• Sectoral Impact: GVA growth for the farm sector is expected to decrease from 4% to 1.8%, and the GVA uptick for Trade, Hotels, Transport, Communication, and Services is projected to moderate from 14% in 2022-23 to 6.3%.
• Consumption Slowdown: GDP data highlights weak consumption growth at 4.4%, marking the slowest consumption growth in the past two decades, excluding the pandemic year of 2020-21.
• Private Final Consumption Expenditure: The NSO predicts a drop in the share of private final consumption expenditure in GDP to 56.9%, the lowest in at least three years.
• Investment Rate: While the investment rate is expected to increase to nearly 30% of GDP, driven by government capital expenditure, higher consumption growth is crucial for private investments to play a role in boosting the economy.