CEA To Industry: Indian Economy On Autopilot, Optimistic About Growth

India's economic growth will inch closer to 6.5–7% for fiscal 2024 as companies step up investment and advancements in digital infrastructure bring more people into the formal economy, according to Chief Economic Advisor V Anantha Nageswaran.

Taking into consideration the current momentum of the Indian economy, the FY23 growth estimate of 7.2% could well be an underestimate, rather than an overestimate, Nageswaran said while speaking at an industry interaction event organised by the Confederation of Indian Industry.

Earlier this month, India clocked a GDP growth of 6.1% in Q4 FY23 as against 4.5% in Q3 FY23. For the full fiscal 2023, economic growth was 7.2% as compared with expectations of 7%, according to data released by the Ministry of Statistics and Programme Implementation.

This optimism over India's economic growth for the next decade stems from the improved health of corporate balance sheets and on-ground investments by the private and public sectors, Nageswaran said.

"Capital formation in terms of investments on the ground in the economy by the private and public sectors is now at a nine-year high ... private consumption growth rate since pandemic has caught up with the pre-pandemic trend," he said at the gathering.

Evidencing data on high capacity utilisation in the private sector, he said that he foresees income growth in the rural economy on the back of higher construction sector activity and a good monsoon.

India's challenge would be to maintain economic growth while growing sustainably by controlling its emissions and investing in technologies like battery storage, green hydrogen, and mini nuclear power plants, which would be key to ensuring energy security, he said.

The agricultural sector is in a good position even if monsoons are delayed given the current water availability via reservoir storage, the CEA said.

Amid concerns over El Nino impacting the monsoon in India, the country's Meteorological Department has predicted a 'good monsoon' for the year. The southwest monsoon remains a key factor in continued growth prospects, impacting the kharif yeilds to come.

The agri-sector is looking forward to a year of good growth and a good harvest, Nageswaran said.

"Even if the monsoon has a slight delay, water reservoir storage levels are at a 10-year high ... pan-India water reservoir storage levels are 24% higher than the last ten years," he said.

The reservoir storage levels are 36% higher than the 10-year average in south India, 25% higher in western India, and 22% higher in central India, he said.

Seed availability for the kharif crop, strong food procurement in 2022–23, domestic tractor sales, and fertiliser stock give the government confidence in the farm sector's prospects, according to Nageswaran.