India’s economy maintained the momentum from FY23 into FY24 despite facing various external challenges. The Economic Survey 2024 reported that India’s real GDP grew by 8.2 percent in FY24, surpassing the 8 percent mark in three out of four quarters.
On Monday, Finance Minister Nirmala Sitharaman presented the annual survey in Parliament at the start of the Budget session. The survey highlighted that the focus on maintaining macroeconomic stability minimized the impact of external challenges on India’s economy.
Key Insights from the Economic Survey on Economy and Growth
In 2023, global economic growth patterns varied significantly. The April World Economic Outlook reported global growth at 3.2 percent, but this figure concealed a complex mix of domestic structural issues, differing exposures to geopolitical conflicts, and the effects of monetary policy tightening, leading to divergent growth rates among countries.
The government’s emphasis on capital expenditure and sustained private investment momentum boosted capital formation growth, with Gross Fixed Capital Formation increasing by 9 percent in real terms in 2023-24.
Looking ahead, healthier corporate and bank balance sheets are expected to further bolster private investment. Positive trends in the residential real estate market indicate significant growth in household sector capital formation.
Inflationary pressures from global challenges, supply chain disruptions, and unpredictable monsoon patterns were effectively managed through administrative and monetary policy measures. Consequently, retail inflation, which averaged 6.7 percent in FY23, decreased to 5.4 percent in FY24.
Despite expansionary public investment, the fiscal balances of the general government have progressively improved. This achievement was facilitated by enhanced tax compliance due to procedural reforms, controlled expenditure, and increased digitization.
The external balance faced pressure from weak global demand for goods, but robust services exports largely offset this. As a result, the Current Account Deficit (CAD) was 0.7 percent of GDP in FY24, improving from a deficit of 2.0 percent of GDP in FY23.
The Indian economy has recovered and expanded steadily post-pandemic. The real GDP in FY24 was 20 percent higher than its level in FY20, a milestone achieved by only a few major economies. The outlook for continued strong growth in FY25 and beyond is positive, contingent on geopolitical, financial market, and climate-related risks.
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