The Aryavarth Express
Agency(New Delhi): Amidst global uncertainties and the aftereffects of the COVID-19 pandemic, the Indian economy has demonstrated remarkable resilience, maintaining solid macroeconomic fundamentals. As per the First Advance Estimates of National Income for the fiscal year 2023-24, India’s Real GDP is projected to grow at 7.3%. This positive outlook was highlighted in the Macro-Economic Framework Statement 2024-25.
The growth drivers for the Indian economy in the first half of FY2023-24 include strong domestic demand for consumption and investment, complemented by the Government’s sustained focus on capital expenditure. Industry and services sectors were the primary contributors to growth on the supply side. During this period, India registered the highest growth among major advanced and emerging market economies. The International Monetary Fund (IMF) anticipates India becoming the third-largest economy in 2027 in USD at market exchange rates and expects India’s contribution to global growth to increase by 200 basis points over the next five years.
Union Finance and Corporate Affairs Minister, Smt. Nirmala Sitharaman, announced an 11.1% increase in capital expenditure outlay for the next year to Rs. 11,11,111 crore, equivalent to 3.4% of the GDP, during the presentation of the Interim Budget 2024-25 in Parliament. Additionally, the Government allocated Rs. 1.3 lakh crore in BE 2023-24 towards fifty-year interest-free loans to States to enhance their capital expenditures.
The decade of 2014-23 has been termed as a golden era for FDI inflows, with the inflow during this period being double that of 2005-14, amounting to USD 596 billion. Smt. Sitharaman emphasized the ongoing negotiations for bilateral investment treaties in the spirit of ‘First Develop India’ to encourage sustained foreign investment.
The Indian economy also saw macroeconomic stability and improvements in its external position, particularly in the moderation of the current account deficit and revival of capital flows, resulting in stability for the Indian rupee during FY 2023-24. Inflationary pressures in India have been majorly moderated, driven by proactive government initiatives.
Regarding fiscal health, the Finance Minister noted that the fiscal deficit for 2024-25 is estimated at 5.1% of the GDP, with a commitment to reduce it below 4.5% by 2025-26. The Revised Estimates for 2023-24 project a Fiscal Deficit to GDP of 5.8%, lower than the Budget Estimates of 5.9%.
The fiscal strategy for FY 2024-25 focuses on making the domestic economy more resilient to external shocks, increasing resources for capital spending, supporting state efforts for capital spending, and prioritizing expenditure towards key developmental sectors such as drinking water, housing, sanitation, green energy, health, education, agriculture, and rural development. Additionally, the strategy includes enhancing cash management effectiveness and coordinated planning and implementation of infrastructure projects under the PM Gati Shakti principles.