India will clock 6.5% GDP growth in FY24

Bright spots for India

♦ Corporate profitability

♦ Private sector capital formation

♦ Bank credit growth and

♦ Activity in the construction sector

The Union Finance Ministry on Friday exuded confidence that the country will achieve 6.5 per cent growth in FY24 on the back of improved corporate profitability, private capital formation and bank credit growth, notwithstanding the risks of rising crude oil prices and monsoon deficit.

The ministry’s August edition of Monthly Economic Review said the 7.8 per cent growth recorded in the first quarter (April-June) was on account of strong domestic demand, consumption and investment. The growth was also witnessed in various high-frequency indicators. Flagging certain risks like steadily climbing crude oil prices in the global market, impact of monsoon deficit in August on Kharif and Rabi crops, the review said, “that needs to be assessed.” At the same time, it observed, the rains in September have erased a portion of the rainfall deficit at the end of August.

Furthermore, the review said, a stock market correction, in the wake of an overdue global stock market correction, is an ever present risk, and offsetting these risks are the bright spots of corporate profitability, private sector capital formation, bank credit growth and activity in the construction sector. “In sum, we remain comfortable with our 6.5 per cent real GDP growth estimate for FY24 with symmetric risks,” it said.

Observing that the strength of domestic investment is the result of the government’s continued emphasis on capital expenditure, the report said, measures implemented by the central government have also incentivised states to increase their capex spending.