3 min readNew DelhiJan 31, 2023 10:49 AM IST
First published on: Jan 31, 2023 at 10:20 AM IST
Higher domestic demand and a pick-up in capital investment is expected to help the Indian economy grow 6.5 per cent in real terms in FY24 or 2023-24, the Economic Survey is learnt to have projected. In nominal terms, the GDP growth rate is expected to be around 11 per cent, suggesting an average annual inflation during the next financial year to be 4.5 per cent.
The Economic Survey 2022-23, scheduled to be tabled in Parliament by Union Finance Minister Nirmala Sitharaman Tuesday morning, has also likely projected the growth rate for the current financial year, i.e., 2022-23, at 7 per cent. This is higher than the 6.8 per cent growth forecast of the Reserve Bank of India in its December 7, 2022, monetary policy.
Sources said a 7 per cent growth in 2022-23 for India is higher than that for most major global economies and is even slightly above than the average growth rate for the Indian economy in the decade leading up to the pandemic.
Sources said the higher growth comes despite the three shocks of Covid-19, Russian-Ukraine conflict, synchronised monetary policy tightening by most central banks leading to dollar appreciation and a widening current account deficit for net importing countries like India.
In 2021-22, the economy had posted a growth rate of 8.7 per cent.
The Survey, sources said, however cautioned about the persisting challenge of the depreciating rupee due to further rate hikes by the US Federal Reserve. This will come along with a higher current account deficit with commodity prices remaining elevated, and India’s growth momentum remaining strong.
Elaborating on its concerns, the Economic Survey said risks to the current account balance come from multiple sources – global commodity prices remaining above pre-conflict levels and higher import bill due to buoyant growth prospects amidst high commodity prices. This may be exacerbated due to slowing global demand, and hence a plateauing of exports from India.
The other worry is about inflation remaining entrenched for longer than expected. This may prolong the monetary tightening cycle of the RBI, and borrowing costs may remain higher for longer.
A lower global growth, however, presents two silver linings, the Economic Survey notes. One, oil prices will stay low and India’s current account deficit will be lower than currently projected.
A worker grinds a metal gate inside a household furniture manufacturing factory in Ahmedabad, India. (Reuters /Amit Dave) 
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