High-frequency indicators like tax revenues, consumer optimism, growing auto sales, expanding manufacturing market have contributed to rapid surge in Indian economy in FY24.
After back-to-back recognition by International Monetary Fund and S&P Global reports, India’s gross domestic product (GDP) flourished at 7.8% on an annual basis in FY24’s last quarter (Q4). Moreover, the Centre has estimated the overall growth rate of FY24 to be 8.2%, the Ministry of Statistics and Programme Implementation (MOSPI) data reported. Let's find out the growing sectors, challenges, and growth predictions for dynamic Indian economy.
The real Gross Value Added (GVA) grew by 7.2% in FY24 beating 6.7% in 2022-23. According to central government report: “This GVA growth has been mainly due to significant growth of 9.9 per cent in manufacturing sector in 2023-24 over a contraction of 2.2 per cent in 2022-23 and growth of 7.1 per cent in 2023-24 over 1.9 per cent in 2022-23 for mining sector.”
Agricultural & Mining Sector: Since independence, India has been an agricultural-dominated economy. Although industrial sector is performing good in India, majority of Indians are still dependent on agricultural products. In FY23, the share of agriculture in India's GDP was 15%.
Since 1970s, India has seen growth in industrial sector. Presence of large mines helped India growing in mining sector like iron ore, limestone, bauxite, asbestos. As per recent statistics, India mined approximately 780 million tons of coal in 2022.
The agriculture and mining sector grew at 2.1% annually. The agriculture and mining sectors reported a growth of 1.4% and 7.4%, compared to 4.7% and 1.9%, respectively.
Growing Industrial Sector: India is also one of the largest suppliers of pharmaceuticals, automobiles, and steel. The manufacturing, electricity and construction component sector grew at 9.7% on a year-on-year (Y-O-Y) basis. The manufacturing sector experienced a hike of 9.9% while electricity sector saw 7.5% growth. The construction sector experienced a growth of 9.9% in FY24.
Growth in Tertiary Sector: Trade, hospitality, real estate, and defence comes under tertiary sector. The combined growth of tertiary sector was reported 7.6% beating last year's 6.4%. Among these, real estate and professional service category saw the biggest jump with 8.4% growth annually. As per Indian government report, tourism and hospitality sector contributes approximately US$ 178 billion to the nation's GDP. Medical tourism is also a major sector in India. The rise in culinary tourism is benefiting the Indian hospitality sector widely. Global tourists are coming to India to explore authentic indian culinary foods.
For FY25, experts have a positive outlook on Indian economy. Rajani Sinha, Chief Economist at CareEdge predicted: “We expect GDP growth at around 7 per cent in FY25. This is based on expectations of improvement in consumption trends as inflation moderates and agricultural sector performance improves. Given the increased intent to invest by the private sector, we expect a pickup in their capex cycle in the coming quarters.”
The Asian Development Bank (ADB) has predicted a 7% growth for the current fiscal year.
With rising challenges including climate change, Artificial Intelligence (AI), and automation, the world is looking at the economic performance of the largest democracy.
