India's real GDP is projected to grow between 6.5-7% in 2024-25, according to the Economic Survey 2023-24 presented in Parliament by Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman. The survey highlighted several domestic growth drivers that have supported economic growth in FY24, with real GDP being 20% higher than pre-COVID FY20 levels. India demonstrated a resilient economic performance, growing at an average annual rate of 6.6% during the decade ending FY20, reflecting its long-term growth prospects.

Domestic Growth Drivers

The survey attributes the robust GDP growth to stable consumption patterns and improving investment demand. High-frequency indicators like GST collections and e-way bill issuance demonstrated double-digit growth in FY24, reflecting strong economic activity. Private non-financial corporations' Gross Fixed Capital Formation (GFCF) increased by 19.8% in FY23, with sustained momentum in FY24.

Sectoral Contributions to GVA

The shares of the agriculture, industry, and services sectors in overall Gross Value Added (GVA) at current prices were 17.7%, 27.6%, and 54.7%, respectively, in FY24. The manufacturing sector saw a significant growth of 9.9% in GVA, benefiting from reduced input prices and stable domestic demand. Similarly, construction activities also grew by 9.9%, driven by infrastructure development and strong demand in the real estate market.

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Real Estate and Financial Sector Performance

The real estate sector showed remarkable performance, with residential real estate sales in 2023 reaching the highest levels since 2013, growing 33% YoY, with 4.1 lakh units sold in the top eight cities. The banking and financial sector is well-positioned to meet growing financing needs, supported by cleaner balance sheets and adequate capital buffers.

Risks and Challenges

Despite these positive trends, the Economic Survey 2023-24 cautioned about potential risks. Geopolitical conflicts in 2024 could lead to supply disruptions, higher commodity prices, and inflationary pressures, potentially impacting the Reserve Bank of India's (RBI) monetary policy. The survey noted that while core inflation remains around 3%, the RBI has kept interest rates unchanged, delaying anticipated easing.

Global Trade Outlook

The global trade outlook for 2024 remains positive, with merchandise trade expected to rebound after a contraction in 2023. The survey emphasized the importance of leveraging government initiatives and the emerging market potential to expand business, consultancy, and IT-enabled services exports. This optimism in global trade is expected to bolster India's economic growth further.

Resilience to Global Challenges

India’s economy has shown remarkable resilience to global challenges, with real GDP growing by 8.2% in FY24. This growth was driven by stable consumption and improving investment demand. The survey underscores that leveraging domestic growth drivers, maintaining policy stability, and addressing external risks will be crucial for sustaining this momentum.

Conclusion

The Economic Survey 2023-24 provides a comprehensive analysis of India's economic performance and prospects. The projected GDP growth of 6.5-7% in 2024-25 reflects the underlying strength and resilience of the Indian economy. However, the survey also highlights the importance of being vigilant about geopolitical risks and inflationary pressures. By leveraging government initiatives and emerging market opportunities, India can continue to build on its growth trajectory and achieve sustainable economic development.

As India navigates through these challenges and opportunities, the collaboration between policymakers, industry stakeholders, and the international community will be vital. The continued focus on infrastructure development, manufacturing growth, and service exports will be key drivers of economic progress. The Economic Survey's insights and projections serve as a valuable roadmap for India's journey towards achieving its economic aspirations in the coming years.

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