Economic Survey projects India’s GDP growth at 6.5–7% in 2024-25

Economic Survey 2023-24 presented in Parliament by finance minister Nirmala Sitaraman has projected India’s real GDP growth at 6.5–7 per cent in 2024-25. 

India’s real GDP grew by 8.2 per cent in the 2023-24 financial year, outpacing the 8 per cent growth rate for the first three quarters of the fiscal, according to the survey.

Growth drivers

India’s economic resilience was backed by the rising share of agriculture, industry and service sectors, which recorded growth rates of 17.7 per cent, 27.6 per cent and 54.7 per cent, respectively, the survey points out.

Manufacturing output and construction activity recorded 9.9 per cent growth 

With 4.1 lakh residential units sold across top 10 cities, real estate sales recorded 33 per cent growth rate in in 2023,, the highest since 2013.2, as per the survey.

Capital expenditure for FY24 has been budgeted at Rs9.5 lakh crore, which is an year-on-year increase of 28.2 per cent and 280 per cent of the  FY20 level, the survey points out.

Spending right

The quality of government spending by states improved, leading to a lower gross fiscal deficit of 8.6 per cent, which is lower than the budget 

Similarly, gross non-performing assets of banks hitting a 12-year low, showing a marked improvement in asset quality.

Service exports from the country reached a new  high of $341,1 billion in FY24 while  its forex reserves reached a new high of , which is sufficient to cover projecte exports for 11 months.

On the social spending side, the government transferred Rs36.9 lakh crore since the launch of the scheme in 2013.

Employment

Labour market has consistently showed improvement with urban unemployment rate hitting a low of 3.2 per cent in 2022-23.

Urban unemployment rate for people above 15 years of age declined to 6.7 per cent in the quarter ending March 2024 from 6.8 per cent in the corresponding quarter of the previous year.

More than 45 per cent of the workforce is employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in service sector and 13.0 per cent in construction.

Women as a percentage of total labour force to 37 per cent in 2022-23 from 23.3 per ent in 2017-18 mainly through mobilisation of women in rural areas, achieving a deeper change in female employment.

Employment growth in India will continue as the manufacturing sector is less exposed to AI, which is still cheaper in India.

With the workforce expected to expand to 2.35 crore by 2029–30, the Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce, says the survey.

Growth prospects

The Indian economy made a quick turnaround from the lows of the pandemic days, with its real GDP standing 20 per cent higher in the 2023-24 financial year compared to the 2019-20 financial year, the survey notes.

Economic growth in India in FY24 has been driven more by domestic activity than external demand growth was falling amidst uncertain global economic performance, the survey points out.

Gross tax revenue of the centre increased by 13.4 per cent year-on-year in FY24 on the back of a 15.8 per cent growth in direct taxes and a 10.6 per cent increase in indirect taxes.

During the decade ending FY20, India’s economy  grew at an average annual rate of 6.6 per cent, which is in line with its long-run growth prospects, the survey adds.

However, any escalation of geopolitical conflicts and subsequent disruptions in supply, increase in commodity prices and a revival of inflationary pressures as also any disruption of capital flows induced by monetary policy changes could alter the growth trajectory, the survey cautions.

As things stand, global merchandise trade is expected to gain momentum in 2024, after a contraction in FY23, according to the survey.

The survey notes that for India to achieve any substantial increase in exports, the country needs to leverage untapped potential in emerging markets.