The average capital investment in many sectors is growing at more than 20%, and there are multiple indicators pointing to a momentum in the economy, Chief Economic Advisor V Anantha Nageswaran said on Thursday.
He exuded confidence that the finance ministry's target of narrowing the fiscal deficit to 5.9 in the current financial year and to 4.5% in 2025-26 would be achieved.
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Addressing FICCI's special interactive session on "Indian economy@100 - Journey to the Amrit Kaal", the CEA said that last year many sectors saw average capital investment growing at more than 20%. In fact, in the hotels and hospitality sector, there was an 80% growth in capital expenditure in fiscal 2023 over fiscal 2022, he said.
"The total employment in the hospitality sector which was 4 crore pre-pandemic declined to 2.9 crore during the pandemic years, and now it has increased to 4.5 crore exceeding the pre-pandemic data. The hospitality sector now employs 50 lakh people more than it employed pre-pandemic," he said.
The construction sector is picking up quite strongly and foreign tourist arrival is now catching up with the pre-pandemic trends. While the growth rate of industry seemed to have slowed temporarily caused by the high oil prices, the services growth is quite robust and agriculture growth, as one would expect, is steady between 3-4%, he said.
"The export of goods and services together is 24% of the Gross Domestic Product (GDP) and imports are slightly on the higher side given that India has a net trade deficit. Our overall trade exposure is more than 50% of the GDP. So, India is not a closed economy. India is an open economy," Nageswaran said.
Addressing the concerns of El Nino, Nageswaran said the country is 'well covered' in handling the impact of the monsoon on output and prices.
"It's good to see the Southwest Monsoon being active. By and large, the monsoon does have an important sentiment effect on the economy. But in terms of handling its impact on output and prices, we are well covered," he said.
The Southwest Monsoon set in over Kerala on June 8.
Regarding inflation, the CEA said it has been moderate and that it would not be a challenge for households and cost of living in 2024.
Expressing optimism about India's growth potential, the CEA said GDP growth for fiscal year 2023 was 7.2% with expectations that the final figure might surpass that.
India was the tenth largest economy in 2014 and it is expected that the country would emerge as third largest economy in 2027. India's contribution to the global GDP has increased six-fold since the turn of the millennium. "India is set to become the third-largest contributor to the global GDP this year," Nageswaran said adding that digital transformation of India will also play a crucial role.
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