India’s economy is expected to grow at 6.5% in the current fiscal year (FY24), according to the Chief Economic Adviser (CEA). This growth is supported by strong services activity and robust demand. The CEA also said that there is no real cause for concern about inflation, as both the government and the Reserve Bank of India (RBI) are taking adequate steps to maintain supply and keep prices under check.
The services sector is the key driver of growth, with growth of 8.3% in the April-June quarter of FY24. This is due to the continued recovery of the tourism and hospitality sectors, as well as the growth of e-commerce and other IT-related services. The manufacturing sector is also growing at a healthy pace, with growth of 7.1% in the same quarter. This is due to the revival of investment and the expansion of production capacity.
Government spending is also expected to boost growth, with the government increasing its capital expenditure target for FY24. The government is also taking steps to boost infrastructure development, which will further support growth.
The CEA said that inflation is expected to remain under control in FY24. The RBI has already taken steps to contain inflation, such as raising interest rates. The government is also taking steps to control inflation, such as increasing the production of essential commodities and providing subsidies to farmers.
The main risks to growth are the ongoing war in Ukraine and the slowdown in the global economy. The war in Ukraine has led to higher commodity prices, which could dampen demand and growth. The slowdown in the global economy could also reduce demand for Indian exports.
Despite the risks, the CEA is confident that India’s economy will grow at 6.5% in FY24. The government and the RBI are taking steps to mitigate the risks and ensure a smooth economic growth trajectory.
In addition to the above, here are some other factors that could affect India’s GDP growth in FY24:
- The monsoon season: A good monsoon season is essential for agricultural production and rural incomes, which would boost overall demand.
- The global oil price: A rise in oil prices could lead to higher inflation and slower growth.
- The US Federal Reserve’s monetary policy: The Fed is expected to raise interest rates in the coming months, which could lead to capital outflows from emerging markets like India.
Conclusion
Overall, the outlook for India’s GDP growth in FY24 is positive. However, there are some risks that could derail growth. The government and the RBI will need to closely monitor these risks and take timely action to mitigate them.
