Boost for Modi's election chances as India predicts 7.3% growth in 2023-24

India anticipates a robust annual growth of 7.3 per cent in the fiscal year concluding in March, marking the highest rate among major global economies. This positive outlook serves as a significant endorsement for prime minister Narendra Modi as the nation gears up for national elections scheduled before May.

The National Statistical Office (NSO) on Friday (5) released the preliminary projections for 2023-24, emphasizing in a statement that subsequent revisions may be influenced by enhanced data coverage, actual tax receipts, and expenditures on state subsidies.

The initial advance estimates of the annual gross domestic product align with last month's upward adjustment in the forecast to seven per cent, as declared by India's central bank, Reserve Bank of India (RBI), surpassing the earlier estimate of 6.5 per cent.

Read: Indian economy outperforming peers, projected to grow at 6.2% in 2024: UN

Analysts suggest that achieving growth surpassing seven per cent for the third consecutive year amid a global economic slowdown could enhance Modi's prospects of securing a third straight term to govern the third-largest economy in Asia.

"This growth comes at a time when global conditions remain weak and its credit goes to how the government is managing the economy," Rahul Bajoria, economist at Barclays Investment Bank, was quoted as saying by Reuters.

S&P Global Ratings predicts that India will remain the fastest-growing major economy for the next three years, putting it on track to become the world's third-largest economy by 2030, overtaking post-war performers such as Japan and Germany.

India's economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.

Indian finance Minister Nirmala Sitharaman, who will present an interim annual budget on February 1 ahead of the elections, is expected to increase spending on infrastructure, helped by rising tax receipts, while looking to lower the fiscal deficit from 5.9 per cent of the GDP in the current fiscal.

India witnessed a faster-than-expected economic growth of 7.6 per cent year-on-year in the September quarter, after growing 7.8 per cent in the previous quarter, prompting many private economists to revise their yearly estimates upward.

According to many economists, India's growth was fuelled by sectors, including information technology and financial services that only generate limited jobs and do not help the poor in rural parts.

Average per capita income in India with a population of over 1.4 billion, remains around $2,500, less than a quarter of China's.

(With Reuters inputs)