AYODHYA, INDIA – DECEMBER 30: Prime Minister Narendra Modi during the road demonstration at Rampath on December 30, 2023 in Ayodhya, India. Ahead of the consecration ceremony of the Ram Lalla temple in Ayodhya next month, Prime Minister Narendra Modi arrived in the temple city today, December 30, and inaugurated several projects worth a total of Rs 15,000 crore for Ayodhya. The projects include developments such as the airport, the railway station, the motorway and the doubling of a railway line. (Photo by Deepak Gupta/Hindustan Times via Getty Images)
Hindustan Times | Hindustan Times | Getty Images
India forecast annual growth of 7.3 percent for the fiscal year ending in March, the highest rate of any of the world’s biggest economies, giving Prime Minister Narendra Modi a boost ahead of national elections scheduled before May.
“These are early projections for 2023/24,” the National Statistics Office (NSO) said in a statement on Friday, adding that improved data coverage, actual tax receipts and government subsidy spending could influence subsequent revisions.
The first advance estimates for annual gross domestic product follow last month’s raised forecast to 7% by the Reserve Bank of India (RBI), up from 6.5% previously.
Analysts said growth above 7 percent for a third straight year amid a global slowdown would help Modi win a third term to rule Asia’s third-largest economy.
“This growth comes at a time when global conditions remain weak and credit goes to the way the government is managing the economy,” said Rahul Bajoria, economist at Barclays Investment Bank.
S&P Global Ratings expects India to remain the fastest-growing major economy for the next three years, on track to become the world’s third-largest economy by 2030, overtaking Japan and Germany.
India’s economy grew 7.2% in 2022/23 and 8.7% in 2021/22.
Finance Minister Nirmala Sitharaman will present an interim annual budget on February 1 and is expected to increase spending on infrastructure, helped by rising tax revenue, while aiming to reduce the fiscal deficit from 5.9 percent of GDP in the current fiscal year.
Government spending is estimated to grow by around 4% year-on-year in 2023/24 compared with a 0.1% increase in the previous financial year, while private investment will grow by 10.3%, down from a rise of 11.4% the previous year, the figures showed.
Private consumption, which accounts for nearly 58% of GDP, was seen growing by 4.4% year-on-year compared to 7.5% in the previous fiscal year.
Expansion of processing
Modi has taken steps to attract global companies, including Apple and Japanese companies, to set up factories in India while increasing spending on building roads, ports and airports.
Manufacturing, which accounts for around 17% of GDP, is estimated to grow by 6.5% year-on-year in 2023/24, compared with 1.3% a year ago, while manufacturing output saw a 10 .7%, up from 10% in the previous year, data showed.
India posted a faster-than-expected economic growth of 7.6 percent year-on-year in the September quarter, following growth of 7.8 percent in the previous quarter, prompting many private economists to revise their annual estimates upward.
Many economists believe that India’s growth has been fueled by sectors including information technology and financial services that create limited jobs and do not help the rural poor.
Growth in agricultural output, which contributes about 15 percent of GDP and employs more than 40 percent of the workforce, slowed to 1.8 percent in the current fiscal year from 4 percent a year earlier.
Average per capita income in the South Asian nation of more than 1.4 billion remains around $2,500, less than a quarter of China’s.