India’s robust economic performance stands out amidst sluggish global growth, according to the monthly economic review report from the Department of Economic Affairs, Ministry of Finance.
Recent data reveals that India’s economic growth hit a six-quarter high in Q3FY24, surpassing 8% for the third consecutive time, building upon the momentum of previous quarters. The second advance estimate for economic growth in FY24, released after incorporating updated information, has bolstered the optimism about the economy.
The report shows stable consumption along with strong investment as key drivers of growth. The government’s focus on public investment has not only encouraged private investment but also led to a surge in demand, propelling sectors like manufacturing and construction.
Despite geopolitical challenges, India’s external account remains stable, with a narrowing merchandise trade deficit and strong services exports. Furthermore, foreign investment sentiment is positive, with foreign portfolio investors turning net buyers in February, while foreign direct investment inflows are awaiting to gain momentum.
India continues to attract global investment, maintaining its position among the top five destinations for global greenfield projects. Retail Inflation remained stable for the sixth consecutive month, supported by strong domestic growth and favorable global commodity prices core inflation rate is declining continuously. Timely and multi-frontal supply-side measures by the Government have also helped the cause of price stability.
Encouraging trends in employment, as indicated by three recent data releases, further contribute to the positive economic outlook. The latest results of the Periodic Labour Force Survey indicate both unemployment rates and labor force participation have shown promising trends.
RBI’s KLEMS database updated up to 2021-22 points to a revival of the structural transformation of the Indian labour market, with the buoyant non-farm sector being able to absorb the labour force freed from farm operations.
In the manufacturing sector, results of Annual Survey of Industries for FY21 and FY22 shows resilience with employment showing signs of recovery post-pandemic disruptions.
The upward revision of GDP growth estimates for FY24 stresses the economy’s strength, with various institutions projecting growth rates around 8%. Government-led initiatives, particularly in infrastructure and technology such as “India AI Mission”, are driving investment and innovation, further bolstering economic prospects.
With steady consumption and expectations of a normal monsoon in FY25, the outlook for rural demand remains positive. The latest Household Consumption Expenditure Survey (HCES) 2022-2023 results suggest inclusive growth in the past decade, also reiterating the improved rural demand scenarios.
(Inputs from ANI)