According to the Finance Ministry's half-yearly economic review report, released on December 29, India's economy is likely to comfortably exceed the government's growth target of 6.5 percent in FY24. The momentum achieved by the Indian economy in the second quarter of FY24 is likely to be maintained in the next December quarter of the fiscal year as per the Finance Ministry.
Aside from that, the ministry stated that the growth in consumption demand is projected to continue. The Finance Ministry stated in the half-yearly economic review 2023-24 report that real GDP increased by a solid 7.7 percent in H1 of FY24, following a 7.6 percent increase in Q2.
According to the government, solid domestic consumption and investment fueled GDP growth in the first half of FY24. Private Final Consumption Expenditure (PFCE) increased by 4.5%, with its proportion of GDP (Current Prices) climbing to 60.4%, the highest in H1 since FY12, excluding the pandemic year FY21.
"The better-than-expected growth in Q2 of FY24 and the emergence of India as the fastest-growing major economy in H1 of FY24 have improved the growth prospects and prompted various domestic and international agencies to upgrade GDP growth projections for FY24," the research said. "The relatively stable Indian rupee and adequate foreign exchange reserves generate optimism for India's external sector," it said in the study.
Concerning Inflation:
On the inflation front, "despite temporary disruptions from food prices, the headline inflation outlook is on a declining trend, with the stable downward movement in core inflation and continuing deflation in fuel inflation." Inflation is expected to average 5.4% in FY24, according to the RBI."
According to the most recent consumer price index statistics, the inflation rate was 5.6% in November 2023, with stable core inflation at 4.1% but high food inflation at 8.7%. According to the government, increasing food inflation is primarily attributable to price increases in some vegetables, legumes, spices, and fruits.
Concerning employment:
According to the research, "Urban unemployment rate decreased from 7.2 percent in Q2 of FY23 to 6.6 percent in Q2 of FY24, indicating better growth prospects for India." This reduces the urban unemployment rate from 7.4% in the first half of FY23 to 6.6% in the first half of FY24."
The ministry also stated that net payroll additions under EPFO increased by 18.9 percent year on year in H1 of FY24, with growth occurring across all age categories. Exit from the EPFO net was 72.6 percent lower in the first half of FY24 compared to the same time the previous year.
Collections of revenue:
In terms of income collections from April to October 2023, the government stated, "The Government's net tax revenue in Apr-Oct 2023 increased by 11.2 percent year on year to reach 13 lakh crore." The collection of direct taxes has been robust this year, with a 17.4% YoY increase in corporation taxes and a more than 30% YoY increase in personal income taxes."
In terms of indirect taxes, GST receipts continued to reflect the strength of the economy.
"The monthly Gross GST collection for all of FY24 has been significantly higher than that recorded in the corresponding months of the previous fiscal year." The gross GST revenue for November 2023 was 1.68 lakh crore, 12% higher year on year," according to the official declaration.
Trade Deficiency:
During the first half of fiscal year 24, merchandise exports fell by 8.8 percent. "Across countries, India's exports to the United States, the United Arab Emirates, China, Hong Kong, Singapore, and Saudi Arabia decreased, while exports to the United Kingdom and the Netherlands increased." In the first half of FY24, net service trade climbed by 15.5% year on year. As a result, India's overall trade deficit (Merchandise and Services combined) fell by nearly half to $39.9 billion in H1 of FY24, from $75.3 billion in H1 of FY23, according to the document.
