India's Economic Growth Rate at 8.2 Percent in FY24 as per Economic Survey 2023-24
Introduction
India's economic trajectory has been a subject of keen observation globally, especially in the wake of the global challenges that have tested the resilience of economies worldwide. The Economic Survey 2023-24, presented by Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman, provides a comprehensive overview of India's economic performance over the past year. This year's survey reveals that India's economy has demonstrated remarkable resilience, achieving a real GDP growth rate of 8.2 percent in FY24. This impressive growth rate underscores the robust recovery and steadfast progress of the Indian economy post-pandemic.
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| India's economic growth rate at 8.2 percent in FY24 |
India's Economic Growth Rate at 8.2 Percent in FY24
The Economic Survey 2023-24 highlights that India's real GDP grew by 8.2 percent in FY24, marking an important milestone in the nation's economic journey. This growth rate is particularly significant as it indicates that India has crossed the 8 percent growth threshold in three out of the four quarters of FY24. This sustained growth is driven by stable consumption demand and steadily improving investment demand, showcasing the economy's robustness in the face of global and external challenges.
Projected Economic Growth in 2024-25
Looking ahead, the Economic Survey projects that India's real GDP will grow between 6.5 to 7 percent in 2024-25. This optimistic projection is based on the strong foundation laid by the rapid recovery from the pandemic, with FY24's real GDP being 20 percent higher than the pre-COVID levels of FY20. The survey highlights that while global economic conditions remain polarized, India is well-positioned to sustain its growth trajectory.
Fiscal Deficit and Consolidation
The fiscal health of the nation is a critical aspect of economic stability. According to provisional actual data released by the Office of the Controller General of Accounts (CGA), the fiscal deficit of the central government has come down from 6.4 percent of GDP in FY23 to 5.6 percent in FY24. The Economic Survey anticipates further fiscal consolidation, with the fiscal deficit expected to decrease to 4.5 percent of GDP or less by FY2025-26. This reduction is a positive indicator of the government's commitment to prudent fiscal management.
Gross Fixed Capital Formation
Gross fixed capital formation (GFCF) continues to be a significant driver of economic growth. GFCF by private non-financial corporations, a key source of growth, grew by 19.8 percent in FY23. The survey notes that capital expenditure for FY24 stood at Rs 9.5 lakh crore, reflecting a 28.2 percent increase over the previous year and 2.8 times higher than FY20 levels. This increase in capital expenditure is essential for sustaining long-term economic growth and development.
Gross Tax Revenue
The Economic Survey estimates that the gross tax revenue (GTR) growth is at 13.4 percent in FY24, translating into a tax revenue buoyancy of 1.4. This growth is driven by a 15.8 percent increase in direct taxes and a 10.6 percent increase in indirect taxes compared to FY23. Notably, 55 percent of GTR came from direct taxes, with the remaining 45 percent from indirect taxes. The increase in indirect taxes was mainly led by a 12.7 percent increase in GST collections, highlighting the effectiveness of tax reforms in enhancing revenue generation.
Sectoral Contribution to GVA
The survey underlines that the share of agriculture, industry, and services sectors in total Gross Value Added (GVA) at current prices was 17.7 percent, 27.6 percent, and 54.7 percent, respectively, in FY24. This sectoral distribution reflects the diverse nature of India's economy and the critical role of the services sector as a major contributor to economic growth.
State Finances
The Economic Survey shows that state governments have continued to improve their finances in FY24. Preliminary estimates of finances for a group of 23 states published by the Comptroller and Auditor General of India reveal that the gross fiscal deficit of these states was 8.6 percent lower than the budgeted figure of ₹9.1 lakh crore. Consequently, the fiscal deficit as a percentage of GDP for these states stood at 2.8 percent, compared to the budgeted 3.1 percent. This improvement in state finances is a positive development for overall fiscal health.
Banking Sector Performance
The asset quality of scheduled commercial banks has shown marked improvement. Data from the RBI's June 2024 Financial Stability Report indicates that the gross non-performing assets (GNPA) ratio fell to 2.8 percent in March 2024, reaching a 12-year low. This improvement in asset quality reflects the effectiveness of measures taken to strengthen the banking sector and reduce the burden of bad loans.
Imports and Exports
India's export performance remains robust, with services exports reaching a new high of USD 341.1 billion in FY24. Overall exports (goods and services) grew by 0.15 percent, while total imports declined by 4.9 percent. The survey highlights that this decline in imports, coupled with strong exports, has positively impacted the current account balance, with the current account deficit (CAD) standing at 0.7 percent of GDP, better than the deficit of 2.0 percent of GDP in FY23.
Remittances from Abroad
Remittances continue to be a vital source of foreign exchange for India. Net private transfers, primarily comprising remittances from abroad, rose to USD 106.6 billion in FY24. This substantial inflow contributed to a favorable current account position and supported the economy during challenging times. The survey notes that net FPI inflows stood at USD 44.1 billion during FY24, a significant improvement from the net outflows observed in the previous two years.
Direct Benefit Transfer (DBT) Scheme
The Direct Benefit Transfer (DBT) scheme, along with the Jan Dhan Yojana-Aadhaar-Mobile (JAM) trinity, has been instrumental in promoting fiscal efficiency and reducing leakages. Since its launch in 2013, Rs 36.9 lakh crore has been transferred through DBT. This scheme has revolutionized the delivery of subsidies and benefits, ensuring that they reach the intended beneficiaries directly.
Unemployment Rate
The Economic Survey reports a decline in the all-India annual unemployment rate for persons aged 15 years and above. This decline is accompanied by an increase in the labor force participation rate and the worker-to-population ratio. From a gender perspective, the female labor force participation rate has been rising consistently, reaching 37 percent in 2022-23 from 23.3 percent in 2017-18. The survey also highlights the decline in the youth (aged 15-29 years) unemployment rate from 17.8 percent in 2017-18 to 10 percent in 2022-23.
Transport Sector Developments
The transport sector has seen significant investments and developments. Capital investment in the road network system increased from 0.4 percent of GDP in FY15 to nearly 1.0 percent in FY24, amounting to about ₹3.01 lakh crore. The Bharatmala Pariyojana has notably expanded the national highway network, with the average speed of NH construction increasing from 11.7 km per day in FY 2014 to 34 km per day by FY 2024. Indian Railways has also witnessed substantial growth, with projects planned for major corridors to reduce logistics costs and carbon footprint.
Gig Economy
The gig economy is an emerging sector with significant potential for growth. According to estimates by Niti Aayog, 77 lakh (7.7 million) workers were engaged in the gig economy in 2020-21. The Economic Survey 2023-24 projects that the gig workforce is expected to grow to 2.35 crore (23.5 million) and account for 6.7 percent of the non-agricultural workforce or 4.1 percent of total livelihoods in India by 2029-30.
Social Services and Welfare
Between FY18 and FY24, expenditure on social services has grown at a compound annual growth rate (CAGR) of 12.8 percent, while expenditure on health has grown at a CAGR of 15.8 percent. As a percentage of GDP, expenditure on social services has increased from 6.7 percent in 2017-18 to 7.8 percent in 2023-24. This increase in social sector spending underscores the government's commitment to improving social welfare and healthcare infrastructure.
Conclusion
The Economic Survey 2023-24 paints a promising picture of India's economic landscape. With a real GDP growth rate of 8.2 percent in FY24, the economy has demonstrated resilience and robust recovery from the challenges posed by the global pandemic. The survey highlights the significant contributions of various sectors, prudent fiscal management, and the positive impact of key reforms and schemes. As India looks ahead, the projections for continued growth and fiscal consolidation provide a strong foundation for sustained economic progress.
FAQs
What is the projected economic growth rate for India in 2024-25? India's real GDP is projected to grow between 6.5 to 7 percent in 2024-25.
How much did India's real GDP grow in FY24? India's real GDP grew by 8.2 percent in FY24.
What is the expected fiscal deficit of the central government by FY2025-26? The fiscal deficit is expected to come down to 4.5 percent of GDP or less by FY2025-26.
How much did gross tax revenue grow in FY24? Gross tax revenue growth is estimated at 13.4 percent in FY24.
What is the current unemployment rate for youth aged 15-29 years in India? The youth unemployment rate has declined from 17.8 percent in 2017-18 to 10 percent in 2022-23.
How has the asset quality of scheduled commercial banks improved? The gross non-performing assets (GNPA) ratio fell to 2.8 percent in March 2024, a 12-year low.
Suggestions for Inbound and Outbound Links
Inbound Links:
- Overview of Economic Surveys in India
- Impact of Fiscal Deficit on Indian Economy
- Role of Direct Benefit Transfer in India's Economy
Outbound Links:
- Reserve Bank of India - Financial Stability Report
- Comptroller and Auditor General of India
- Niti Aayog Reports and Publications
