GDP Growth Momentum
The Indian economy demonstrated strong growth in the fiscal year 2024. The GDP expanded by 7.8% in Q1, according to the data released. Subsequent reports
showed continued momentum, with the economy growing by 7.6% in the September quarter, exceeding analysts' expectations. The government's first advance estimates predicted a 7.3% growth for FY24. The IMF raised India’s growth projections for 2024, highlighting its status as the fastest-growing among developing nations. Furthermore, the Finance Ministry anticipates the Indian economy to surpass 6.5% growth in FY24. The Economic Survey 2023-24 also pointed to a strong and stable footing for the Indian economy.
Inflationary Pressures
Inflation has been a significant concern, with retail inflation surging to a 15-month high of 7.44% in July, primarily due to rising vegetable prices. However, it moderated to 6.83% in August. The Reserve Bank of India (RBI) has maintained its fiscal year inflation forecast at 4.5%, citing food prices and geopolitical tensions as influencing factors. The RBI Governor indicated that retail inflation would likely remain high in August before moderating from September. The RBI projected a GDP growth of 7% and inflation at 4.5% for FY 2024-2025. Another bulletin indicated that inflation could stay well above 6% in Q2, indicating continued monitoring of price levels.
Fiscal and Monetary Policy
The government unveiled the Budget 2026, which focused on reform and growth. The budget included a detailed roadmap for fiscal deficit, capital expenditure, and debt management. The Economic Survey 2024-25 was tabled, highlighting India’s economic performance. The RBI maintained its status quo, keeping the repo rate unchanged at 6.5% for the seventh consecutive time. The MPC meeting projected a real GDP growth of 6.5% and CPI inflation at 5.4% for FY24. Additionally, GST collections rose, with GST revenue collection hitting a record high of Rs 2.10 lakh crore in April, marking a 12.4% year-on-year increase in November.
Expert Commentary and Outlook
Various experts offered insights into the economic climate. Anant Goenka, President of FICCI, commented on the budget, noting that while it builds confidence, defense spending was overlooked. CEA V Anantha Nageswaran highlighted India's economic performance and growth potential. Raghuram Rajan and Surjit Bhalla discussed India's GDP, inflation, and wealth creators. Economic reviews suggested that India is expected to grow by 7% in FY25 despite global risks. Market experts also noted the potential impact of tax changes, such as the STT hike.
Key Economic Indicators
The article presents important indicators shaping India's economic performance. The IMF raised India's FY25 GDP growth forecast to 6.5%. The Indian economy is expected to grow at more than 7% for three consecutive years and potentially in FY25 as well. The government's focus on self-reliance in rare earths and the high-speed rail push in the budget are additional crucial factors. The GST collections rose by 15% to Rs 1.67 lakh crore in November. The Economic Survey 23-24 forecast a GDP growth rate between 6.5% and 7%, reflecting a positive outlook on the economy.
