The Indian economy is projected to achieve a growth rate exceeding 7 percent in Fiscal Year 2023, primarily driven by the manufacturing sector, according to a report released by the State Bank of India (SBI). The report, called Ecowrap, published on Friday, indicated that India’s growth in the fourth quarter of FY23 is expected to reach 5.5 percent, leading to an overall growth rate of 7.1 percent for the fiscal year. These estimates align with the advance estimates published by the National Statistical Office (NSO) in January, which forecasted a 7 percent growth rate for the year ending on March 31, 2023.
Ecowrap highlighted the challenges faced by policymakers, regulators, and economists in accurately assessing the true rates of projected growth amid the diverse patterns of growth observed worldwide. These challenges are not limited to the current year of 2023 but extend to 2024 and 2025 due to the elongated inflation trajectory management for central banks resulting from unexpected events in the previous year.
Amidst this global landscape, the SBI Research report emphasised that India is determined to pursue a distinct growth path, focusing on stimulating manufacturing and supporting the services sector to enhance efficiency. Additionally, the report stated that domestic consumption, investment, agricultural and allied activities, as well as credit growth, are expected to benefit from the stronger prospects in the Indian economy. It further mentioned that supply responses and cost conditions are anticipated to improve as inflationary pressures ease.
The Union Budget for 2023-24 has placed a strong emphasis on capital expenditure, which is projected to attract private investment, stimulate job creation and demand, and enhance India’s growth potential, as per the report.
The Reserve Bank of India (RBI) has estimated the real GDP growth for Q4FY23 at 5.1 percent, while the full-year FY23 estimates by the NSO stand at 7 percent. The RBI predicts a GDP growth rate of 6.5 percent for 2023-24, with the first quarter (Q1) expected to reach 7.6 percent.