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CEA Anantha Nageswaran: Solid Growth Prospects In FY24 Backed By Investment And Consumer Momentum

India may face headwinds from crude oil prices, monetary tightening in developed countries and financial stress overseas, he said.

<div class="paragraphs"><p>India's CEA, Anantha Nageswaran. (Source: BQ Prime) </p></div>
India's CEA, Anantha Nageswaran. (Source: BQ Prime)

India's economic growth has maintained momentum, offering 'solid growth forecasts' for fiscal 2024, given the abating global risk and upward trajectory in private investment, according to Chief Economic Advisor V Anantha Nageswaran.

Growth prospects appear bright as India enters the new financial year and that the risks to the growth forecast are more evenly balanced now than they were a few months ago, Nageswaran told reporters after the release of the Q4 GDP data. 

According to data released by MOSPI, India’s GDP grew by 6.1% in Q4 FY23 as against 4.5% in Q3 FY23. For the full fiscal 2023, India’s GDP grew by 7.2% as compared with expectations of 7%.

"We might even be able to say that for the first revised estimates for the year ending March 2023, which will be released in February of next year, (we) will be able to see a further upward revision to these numbers," Nageswaran said.

According to him, Q2 and Q3 data in FY23 were artificially depressed due to the base effect from the upward revision of data starting 2019-2020.

In terms of risks, he highlighted that India might face potential headwinds from crude oil prices, monetary tightening in developed countries and financial stress overseas.

The CEA's Forecast For FY24

  • Investment and consumer momentum will underpin solid growth prospects through the upcoming year.

  • Private sector is poised to attain stronger investment growth, following the strengthening of corporate and bank balance sheets, supported by the government’s capex push.

  • Expansion of public digital platforms and path-breaking measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output.

  • A slowdown in global economy and trade may impact export growth.

  • Prolonged geopolitical uncertainty and tightened financial conditions also pose a challenge to the growth outlook.

"Private Capex Not A Prospective Story, But A Current Reality"

Nageswaran said that private consumption, while showing a dip in Q4, remained at its highest level in 16 years when considered as a share of GDP for the entire FY23.

<div class="paragraphs"><p>MOSPI</p></div>

"Overall, government investment in infrastructure is beginning to crowd in private investments as you can see new project announcements and data released by companies on their cash flow projections," Nageswaran said.

Inflation To Come Closer To RBI Midpoint

With moderating WPI inflation and CPI within RBI's tolerance band, the CEA expects the inflation figures to come closer to RBI's midpoint target of 4% rather than staying above 5% in the current financial year

According to Nageswaran, factors influencing the inflation trajectory include the pass-through effect of lower input costs, a promising kharif season, bumper harvests, the possibility of declining commodity prices in 2023, and the impact of El Nino.

An increase in Minimum Support Price for major crops and a rise in the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) wage rate are expected to improve the financial security of rural households further and boost rural demand in the coming months. 
CEA V Anantha Nageswaran on rural demand