New Delhi, June 9 (Mayank Nigam) Painting a rosy picture of the economy, Chief Economic Advisor (CEA) V Anantha Nageswaran on Friday exuded confidence that India will grow at 6.5-7% in financial year 2023-24 with companies ready to invest and digital transformation taking place at brisk pace. Speaking at an industry event in Lucknow, the CEA said that most high-frequency data point to a healthy growth momentum in the current fiscal and the economy remains in good shape on all parameters. Nageswaran noted that the Indian economy is not only doing exceedingly well in comparison to other major economies but also doing well by its own historical standards. He said that GDP growth in FY23 may be higher than 7.2% when final data comes three years later.
“In 2022-23 we achieved 7.2% growth in real terms after inflation adjustment, following 9.1% in the previous year. Of course, in the pandemic year there was a contraction. Earlier many people expected that financial year 2023 will end with a growth of only around 6.7-6.8% but it is 7.2%. And I can even tell you, some of you may not know, the GDP data gets revised six times. The final number is the sixth estimate which comes three years later. So, the final estimate for the year ending March 2023 will come in January-February 2026. When that number comes out I am confident that the 7.2% will be even higher,” he said. Nageswaran said that he was confident of strong and steady growth in the coming 7-8 years. While noting that GST collection, direct tax mop-up and credit demand all point to growth momentum in FY24 as well, the CEA said that investment which is the key growth driver is at a 9-year high and household consumption is also catching up with the trend.
He said that minimum support price (MSP) hike and MGNREGA wage revision will provide financial security to rural households and boost demand. Further, a good monsoon will raise their income. Talking about urban India, Nageswaran said that there was no problem over there with most indicators such as car sales, housing project launches, air passenger traffic and credit card spending on the rise. The CEA noted that the hospitality sector employed 4 crore people before the pandemic but during Corona times it came down to 2.9 crore. Suggesting that services sector growth remains robust, he said that the hospitality sector now employs 4.5 crore people. Further, he said that banks are willing to lend and industry is ready to borrow. He stated that the government was focussed on improving quality of expenditure and therefore capital expenditure on ground remains its priority.
“Quality of expenditure has been improving. Instead of investing on revenue items, the government in the last six years increased investments on the ground to build highways, airports, railways etc. Capital expenditure is the best way for the government to support the economy because it creates more downstream expenditure as well instead of one time payments or tax cuts to people,” Nageswaran said at the CII event. He noted that digitasation is helping in formalisation of the economy but suggested that there is still huge untapped potential. “We have barely scratched the surface of the potential of digital transformation of India,” he said. The CEA said that India’s forex reserve position remains strong with the country having 10 months of import cover. He highlighted that while goods exports have seen some impact from slowdown in advanced economies, the country’s services exports remain healthy and as a result the trade deficit has come down quite dramatically.