Government estimates India's GDP growth at 7.3% for FY24
India is predicted to see a 7.3% growth in its gross domestic product (GDP) for the fiscal year 2023-24, as reported by the Ministry of Statistics and Programme Implementation today. This growth rate surpasses the Reserve Bank of India's (RBI) 7% forecast and the finance ministry's previous 6.5% projection. To note, the Indian economy experienced a 7.2% growth in 2022-23.
Sector-wise growth projections
The government anticipates a 6.5% growth in the manufacturing industry for FY24, a significant increase from the 1.3% in FY23. However, agriculture, livestock, forestry, and fishing are expected to see a decline in growth, from 4% in FY23 to 1.8% in FY24. The mining and quarrying industry is projected to grow by 8.1%, up from 4.6% in FY23. Additionally, trade, hotels, transport, communication, and services related to broadcasting are estimated to grow at 6.3%, down from 14% in FY23.
How is the first advance estimate of GDP computed?
The first advance estimate is based on the benchmark indicator method. It utilizes provisional data from high-frequency indicators such as consumer inflation, index of industrial production (IIP), revised fiscal numbers, and financial results of listed companies. This method was introduced in 2016-17 and helps in budget exercises, determining nominal GDP for the upcoming year, and setting budget targets for the next fiscal.
Upcoming budget on February 1
The finance ministry will use the first advance estimate while preparing its interim Budget numbers for the presentation on February 1. The ministry is expected to assume a nominal GDP growth rate for 2024-25 while deciding its various Budget numbers for next year. For 2023-24, the ministry had assumed a nominal GDP growth of 10.5%. However, as per the first advance estimate, India's GDP in nominal terms may grow by only 8.9% this year. .
