Bharat’s economy showcased robust performance in the final quarter of the fiscal year 2023-24, surprising analysts with a growth rate of 7.8%. The Ministry of Statistics and Programme Implementation revealed that the overall growth rate for FY24 has been revised upward to 8.2%, a significant increase from the previous estimate of 7.6%.
Furthermore, the data for the preceding quarter, Q3, was revised upwards to 8.6% from 8.4%, reflecting the economy’s consistent strength throughout the year.
Key Sectors Driving Growth
The growth story of FY24 was fueled by notable expansions across various sectors. The primary sector, encompassing agriculture and mining, grew at 2.1%, with agriculture and mining witnessing growth rates of 1.4% and 7.4%, respectively.
The secondary sector, including manufacturing, electricity, and construction, recorded an impressive growth rate of 9.7%, led by a remarkable 9.9% growth in manufacturing. In addition, the tertiary sector, comprising trade, hotels, real estate, and defense, saw a growth rate of 7.6%.
Experts attribute the economy’s buoyancy to the service sector’s resilience and increased public investment. Chief Economic Advisor V. Anantha Nageswaran had predicted FY24 growth to reach 8%, surpassing the 7% growth of the previous fiscal year.
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Prime Minister Modi’s government has emphasized Bharat’s economic progress as a cornerstone of its governance, especially amid ongoing election campaigns.
Outlook for FY25
Looking ahead to FY25, economists express optimism, forecasting a median GDP growth of 6.8% and a decline in inflation to 4.5% from the current 5.4%. Projections from various sources, including the IMF and the Asian Development Bank, paint a positive picture, with estimates ranging from 6.8% to 7% growth.
However, experts stress the need for private investment to sustain and accelerate growth momentum.
Challenges and Policy Implications
Despite the optimistic forecasts, challenges persist, particularly concerning private investment. Economists advocate for proactive measures, such as potential rate cuts by the Reserve Bank of India (RBI), to stimulate investment and bolster economic growth.
The RBI’s upcoming policy meeting is closely watched, with expectations of maintaining the policy rate at 6.5%, followed by potential rate cuts later in the fiscal year post-general elections.
Bharat’s economy has defied expectations, showcasing resilience and momentum in FY24. However, sustaining and accelerating this growth trajectory will require concerted efforts, including facilitating private investment and implementing conducive monetary policies to navigate potential challenges ahead.
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