In the third quarter of the fiscal year 2023–24, the Indian economy showed impressive growth that exceeded forecasts and defied projections. After breaking 8% growth rates in the previous two quarters, the Gross Domestic Product (GDP) showed increased momentum from October to December, recording an astounding expansion of 8.4%.

Updated GDP Growth Projections: Fiscal Years 2023–2024

The full-year GDP growth predictions for the fiscal year 2023–24 have been increased upward to 7.6%, surpassing the previous expectation of 7.3%, according to official government figures issued on Thursday. The strong and unexpected economic performance throughout the given period is reflected in this favorable shift.

The Government’s Main Strategy: Increased Capital Expenditure 

Chief Economic Adviser Subramanian linked the significant expansion in the Indian economy to a conscious reorientation of the government’s priorities toward increased capital outlays. This change has been increasingly noticeable in recent years and has been essential to the rise of the economy.

Fiscal Interim Budget: Establishing the Stage for Expansion

Early in February, the Indian Finance Ministry presented a fiscally responsible interim budget that included significant initiatives to improve economic prospects. According to the budget, the fiscal deficit for the fiscal year 2025 will decrease, from the previously estimated 5.8% for 2024 to 5.1%. The government’s dedication to infrastructure development was emphasized, along with intentions to increase spending in this important area.

Projections of Capital Expenditure and Tax Revenue

The interim budget showed a sharp increase in capital spending, with an increase of 11.1% predicted for the fiscal year 2025, reaching 11.11 trillion Indian rupees ($133.9 billion). Furthermore, it is anticipated that tax revenue will increase by 11.4% to 38.31 trillion rupees, which is indicative of the government’s endeavors to improve fiscal stability.

UBS’s Positive Revisions: Showing Economic Resilience

In response to India’s economic resiliency, international financial services company UBS increased its forecast for real GDP growth in the fiscal year 2024–25 from 6.2% to 7%. Although consumer growth has been muted, Tanvee Gupta Jain, an economist at UBS India, highlighted the country’s strong growth and the possibility of a gradual recovery, especially in luxury and rural segments.

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