First Advance Estimates of India’s GDP for 2023-24

January 8, 2024

The Indian government’s First Advance Estimates (FAE) for 2023-24 released on January 6th project the economy will expand 7.3% – faster than the 7.2% growth achieved in 2022-23 on the back of robust domestic demand.

Timing and Significance of Estimates

Published by January first week every fiscal year, the FAE offer the earliest snapshot of national income growth trends based on initial months’ data. This allows policymakers finalize next year’s budget accounting for latest projections.

Factors Contributing to Growth Trajectory

The FAE calculations reveal private consumption and investments remain primary growth engines firing up overall economic momentum, followed by government expenditure and export-import spending.

Muted Household Spending Poses Concern

However, private consumption which accounts for 60% of GDP is estimated to rise only 4.4% this fiscal – pointing to persisting weakness in consumer sentiment limiting bigger purchases. Significant rural distress implies uneven recovery so far.

Investment Demand Provides Optimism

By contrast, investments directed towards augmenting industrial capacity and output registered healthier 9.3% increase this fiscal – signaling business confidence as capacity utilization levels rise after pandemic, encouraging new capital outlays.

Government Spending Falls Below Potential

Yet government expenditure grew only 3.9% – lower than private demand, indicating fiscal support for economic revival remains subdued despite need for concrete stimulus in distressed sectors.

Lower Import Burden Provides Tailwind

Moreover, Indian’s higher spending on imports over exports drags down GDP calculations. But this ‘negative’ growth jumped 144% signifying relatively improved trade competitiveness enabling export boost.

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