Economic Survey

Economic Survey 2022-23: India’s GDP growth estimated at 6.5% in FY24, to remain fastest-growing economy

Finance Minister Nirmala Sitharaman on Tuesday tabled the Economic Survey 2022-23 in Parliament. The survey estimated India’s GDP growth in FY24 at 6.5 per cent, while the growth for the ongoing year has been projected at 7 per cent, compared to 8.7 per cent in FY22.

At this growth rate, India will continue to be the fastest-growing economy in the world. The GDP growth projections are in line with what economists had predicted earlier.

“The economy has nearly recouped what was lost, renewed what had paused; re-energised what had slowed during the pandemic,” said the Economic Survey 2022-23 document.

Key growth estimates from Economic Survey

The survey projected GDP in nominal terms to be 11 per cent in the next financial year, while the real GDP growth is likely to be in the range of 6-6.8 per cent, depending on the global economic and political developments.

The Economic Survey said growth in FY23 was primarily driven by private consumption, higher capital expenditure, stronger corporate balance sheets, credit growth in small businesses and the return of migrant workers to cities.

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Borrowing costs, inflation, CAD, exports and other trends

It also said that the Reserve Bank of India’s inflation projection of 6.8 per cent is not enough to deter private consumption, even though it is higher than the central bank’s upper limit of 6 per cent. The inflation for FY23 is also unlikely to have dampened investment sentiment, noted the Economic Survey.

The survey, however, highlighted that borrowing costs may remain “higher for longer” and entrenched inflation may prolong the tightening cycle.

Another worrisome point highlighted in the Economic Survey was the widening Current Account Deficit (CAD). The survey said CAD may continue to widen as global commodity prices remain elevated. If the CAD widens further, it could put more pressure on the rupee.

However, the overall external situation remains manageable, as per the survey. It noted that India has sufficient foreign exchange reserves to finance CAD and intervene in the forex market to manage higher volatility in the rupee.

The Economic Survey went on to highlight that growth in exports had moderated in the second half of FY24, and slowing world growth and shrinking global trade led to further loss of export stimulus in the second half of the ongoing fiscal year.

Experts on Eco Survey 2022

Experts said that the growth projections in the Economic Survey provide comfort in the wake of challenges India will encounter in FY24.

Vikas Vasal, National Managing Partner – Tax, Grant Thornton Bharat, said, “The growth projections for the Indian economy provide comfort given the headwinds around the global slowdown. The budget is likely to build upon this momentum through policy reforms, consistent and predictable tax regime, measures to strengthen the investment eco-system, including for start-ups and reduce compliance, disputes and litigation for businesses and individuals.”

Rumki Majumdar, Economist, Deloitte India, also shared views on various aspects of the economic outlook in FY24, with regards to the Economic Survey 2022-23. Majumdar said, “Although this will be the last full-term budget for the current government, it is likely to continue its efforts to push reforms and maneuver the economy to build on India’s resilience.”

She highlighted that a possible strong recovery in China could imply higher demand for commodities, thereby resulting in rising prices. “This could mean that the fight against inflation for India will likely continue. The right mix of fiscal-monetary policies will be key to building a resilient economy,” she added.

The Deloitte economist said private investments are gathering momentum in certain industry pockets, but going forward, investment growth could be “because of adaptive expectations.

“High inflation for a prolonged period and rapidly rising interest rates could lead businesses to believe that this may continue in the future as well. Amidst the impending global slowdown, it is important to anchor such expectations so that they don’t weigh on private investment decisions. That signifies the urgency of a successful tightrope walk amongst the policymakers and authorities,” she added.

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