India’s GDP Growth Is Highly Anticipated To Touch 8% In FY24: CEA

India's GDP expanded by 8.4 per cent in the third quarter ending December 2023, following growth rates of 7.6 per cent in the second quarter and 7.8 per cent in the first quarter

Chief Economic Adviser V Anantha Nageswaran said on Wednesday that gross domestic product GDP growth was likely to reach 8 per cent in FY24, driven by the robust growth experienced across the three quarters of the financial year ending March 2024. India's GDP expanded by 8.4 per cent in the third quarter ending December 2023, following growth rates of 7.6 per cent in the second quarter and 7.8 per cent in the first quarter.

"The IMF has projected a growth rate of 7.8 per cent for FY24. But if you look at the trajectory of growth in the first three quarters, obviously, the possibility that the growth rate touches 8 per cent is quite high," Nageswaran said at an event organised by NCAER in Delhi.

This surpasses the Reserve Bank of India's projection of 7.5 per cent growth for the Indian economy in 2023-24. Regarding the current fiscal year, he noted that the International Monetary Fund forecasts growth of 6.8 per cent, while the Reserve Bank of India anticipates a 7 per cent GDP expansion for FY25.

"If that materialises, of course, it will be the fourth consecutive year after COVID starting from FY22 that the economy will have grown at 7 per cent or more. The RBI forecasts of 7 per cent for FY25 turns out to be either correct or even underestimate, then it would be the fourth consecutive year of 7 or higher growth rate," he added.

However, he emphasised that much would depend on the performance of the monsoon. While forecasts suggest an above-normal monsoon, the spatial and temporal distribution of rainfall will be crucial. Regarding growth beyond FY25, he suggested that India could achieve a growth rate between 6.5 and 7 per cent. He attributed this to the notable improvement in balance sheet strength across the corporate sector's financial and non-financial sectors, distinguishing this decade from the previous one.

He noted that investments in physical and digital infrastructure on the supply side have positioned the economy for non-inflationary growth, which also aids in mitigating the risk of overheating. Regarding household sector financial savings flows, he mentioned a decline to 5.1 per cent in 2022-23, attributed to a significant portion of savings shifting towards real sectors.