India to clock GDP growth of 6.5% in FY24; inflation no cause for concern: CEA

NEW DELHI: India’s financial system grew at its quickest tempo in a yr within the June quarter, supported by robust companies exercise and strong demand, knowledge launched by the federal government confirmed on Thursday.
Gross home product (GDP) grew by 7.8% within the April to June quarter, accelerating from the 6.1% progress recorded within the March quarter.
Chief Financial Advisor (CEA) V Anantha Nageswaran on GDP numbers (Watch video)
Drivers of progress
3 Excerpts
* Sturdy companies sector progress: The commercial progress price (PMI manufacturing) is on a continued growth zone, which indicators neither increasing nor cooling manufacturing sector. The core trade progress charges are additionally optimistic.
* City demand stays resilient: Passenger car gross sales grew very strongly in Q1 FY24, in comparison with final yr. Credit score & debit card spending additionally witnessed fast progress.
* Restoration in rural remand: Anecdotal info from excessive worth FMCG firms exhibits that progress is not only concentrated in metros however even small cities & villages. There’s a pickup in rural demand for FMCG gadgets.
2 Video Moments
* Companies sector has been the principle driver of progress whereas trade has remained kind of unchanged (Watch video)
* Authorities’s capital expenditure push is now paying off. It has been championing the capex creation bandwagon during the last 6 years. (Watch video)
1 Perception
India emerges because the quickest financial system. India’s actual GDP progress towers above varied GDP estimates of different nations (Watch video)
India’s progress outlook (Watch video)
3 Excerpts
* There isn’t any actual trigger for concern that inflation would spike uncontrolled as each the federal government and the Reserve Financial institution are taking sufficient steps to take care of provide and preserve costs beneath examine.
* The exterior sector stays secure regardless of considerations. The present account deficit has additional narrowed in This autumn FY 2023. It’s fairly secure and properly inside our tolerance restrict.
* A slowdown within the international financial system and commerce might reasonable export progress however it might be higher for India total. Extended geopolitical unvertainty and tighter monetary situations additionally pose a threat.
2 Video Moments
* Inflation trajectory, whereas it’s being extraordinarily properly managed, will proceed to require consideration on the a part of fiscal and financial authorities. (Watch video)
* GST system is now benefiting each central and state governments. It is a signal of maturation. (Watch video)
1 Perception
The nominal GDP progress was 8% and actual GDP was 7.8% sign that there’s momentum in financial exercise usually and isn’t associated to price-related distortions. The financial system is anticipated to develop at 6.5% within the present fiscal however poor rains in August. (Watch video)

Challenges to govt funding are rising (Learn Fast Edit)
3 Key Factors
* Funding, or gross mounted capital formation, elevated by 8% within the April-June quarter to Rs 14 lakh crore. The central authorities has been the principle driving drive behind funding.
* The fast price of funding may quickly encounter a limitation as a consequence of abnormally low tax collections. The gross tax income of the central authorities for the present quarter has merely risen by 3.3% to succeed in Rs 6.7 lakh crore. This progress tempo is notably under the nominal GDP progress of 8%.
* Therefore, until the central authorities discovers strategies to speed up the speed of tax income growth, the deceleration of its capital expenditure might emerge as a constraint to progress.

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