At 7.8% year on year, India’s growth rate towers above the growth rate in several other leading economies, Dr. V. Anantha Nageswaran, chief economic adviser (CEA), ministry of finance, has said. India’s economic growth maintained the strong momentum witnessed in the final quarter of FY23, he added.

The CEA was briefing media after the release of the estimates of GDP for the April-June quarter (Q1) of 2023-24, both at Constant (2011-12) and Current Prices, by the National Statistical Office (NSO), ministry of statistics and programme implementation, in New Delhi Thursday evening.

Dr. Nageswaran said that overall India’s macroeconomic stability and growth prospects are its strong points and the first quarter GDP data has reaffirmed these two key aspects of the government’s overall macro-economic management, particularly during the pandemic years. India's economy in Q1 grew at the fastest pace in a year, on the shoulders of a boost in capital expenditure both at central and state levels, along with stronger consumption demand, especially in rural areas, and improved performance in the services sector, he added.

The biggest positive for Indian economy is that the private sector capital formation is well underway. This augurs well for future employment and income growth of Indian households, the CEA said. He further highlighted that the new investment projects announced by the private sector have been highest in Q1 of FY2023-24 in 14 years.

Dr. Nageswaran explained that the rural demand for FMCGs has increased especially for high value goods. The same trend is evident for small towns, contributing to growth, he added.

The CEA said that despite global slowdown, the services sector exports have shown a remarkable performance. Both manufacturing and services sectors are expanding and income growth is evident in the recovery in rural demand, he said.

The CEA said that residential real estate sector will underpin growth in the construction material sector.

Dr. Nageswaran stated that the Union government’s single-minded focus on capital expenditure over the years has crowded in the private sector and it has rubbed off on state governments too. However, the CEA added, inflation developments are under control but they bear watching.

Summing up the briefing, Dr. Nageswaran said:
•    Investment and consumer momentum will underpin solid growth prospects over the upcoming year

•    The private sector is poised to contribute to stronger investment growth following the strengthening of corporate and bank balance sheets, supported by the government’s Capex push.

•    Food inflation is likely to subside with the arrival of fresh stock in the market and government pre-emptive measures.

•    Expansion of public digital platforms and path-breaking measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes will boost manufacturing output.