New Delhi: According to a recent report by the World Bank, private consumption and investment have increased in India at an unparalleled rate. It has also been stated that the expansion of services in the nation is strong enough to create jobs for the population, and that the overall growth rate of the economy would be astounding when compared to the pace of growth experienced globally.
World Bank President Ajay Banga said that employment is the surest way to reduce poverty and spread prosperity. India’s economic growth accelerated to 6.1 per cent in the March quarter from a year earlier as a recovery in private investment and domestic consumption offset the drag from softening global demand.
“March 2023 quarter GDP growth surprised positively at 6.1 per cent YoY vs our 5.4 per cent estimate. In sequential, seasonally adjusted annualized terms, the economy picked up to 10 per cent, helped by most segments on the supply side. Meanwhile, investments and net exports played a key role on the demand side of GDP. This growth has come in spite of higher interest rates and weaker real income growth. Both parameters are likely to see improvement in the quarters ahead which should help sustain the robust pace of activity,” said Prithviraj Srinivas, Chief Economist, Axis Capital, Mumbai.
“The main reason for the better-than-expected performance has been significant traction in fixed investment and exports on the demand side and construction and trade, hotel & hospitality on the supply side. Private consumption remains the main source of disappointment,” Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers, Mumbai.
“Going forward, we expect India’s growth to remain around 6 per cent for the financial year ending March 2024. Despite the likely slowdown during the current financial year, we expect at least modest pickup in private consumption demand. The compulsions of fiscal consolidation can depress final consumption demand by government. Barring better-than-expected acceleration in private capital expenditure, we would also expect deceleration in the growth of fixed investment,” he added.
According to economists at Citi, India’s foreign direct investment (FDI) flows may only slightly increase in fiscal 2024 after declining in the first ten months of fiscal 2023, according to Reuters. Citi anticipates that in the fiscal year 2024, net FDI flows, which include both inflows and outflows, will total US$35 billion. This is a result of industrial FDI maybe gaining some impetus from government initiatives and “the build-up of ecosystem around recent large greenfield investments,” according to Samiran Chakraborty and Baqar Zaidi in the note.
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