Chief Economic Advisor V Anantha Nageswaran stated that following the stronger-than-anticipated growth in FY'23 (Financial Year 2023), there is a continued momentum for positive growth expectations in the current fiscal year (FY'24).
Nageswaran revealed during a media briefing that the downside risks to his FY'24 GDP growth prediction of 6.5% seemed balanced and there was a high probability that this figure could be surpassed this fiscal year, following the release of the FY'23 GDP print.
He expressed pleasure in presenting India's story of steady economic growth with stability in macroeconomics, finance, and fiscal matters. Moreover, he anticipated another year of an impressive economic performance.
India's economy expanded by 6.1% in Q1 FY'23, bringing the yearly growth rate to 7.2% due to improved contributions from agriculture, manufacturing, mining, and construction industries.
With the government's capex push, and strengthened corporate and bank balance sheets, the private sector is expected to experience significant investment growth according to Nageswaran. In addition, numerous sectors experienced a healthy YoY (Year-on-Year) increase in private investment during FY'23.
The hotel industry experienced an 80% YoY increase in private investment during FY'23, while the textiles, metals, and steel industries saw over a 50% increase, based on his presentation. Private investment rose by 21.4% YoY in FY'23, according to the CEA's initial estimates, while household consumption was lacklustre but had exceeded pre-pandemic levels.
Further, core and food inflation decreased as a result of a successful harvest and promising outlook for the kharif season, according to his statement.
Nageswaran cited the expansion of public digital platforms, along with measures such as PM GatiShakti and production-linked incentives, as drivers of manufacturing growth. He also noted that Q4 in FY'23 saw the end of two consecutive quarters of YoY contraction, owing to the growth in the manufacturing sector.
He cautioned of subsisting headwinds, including global economic and trade slowdowns affecting exports, prolonged geopolitical uncertainty, and tighter financial conditions, challenging growth prospects.
The CEA predicts that FY'24 inflation will decrease and stay in the 5-6% range, meeting the Monetary Policy Committee's medium-term target.
Despite apprehension over El Niño patterns, he assured that adequate measures have been taken, including the maintenance of ample buffer stock, to prevent any price surge caused by drought-like conditions.
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