GDP growth at 7.3% in govt’s crystal ball

livemint.com:

₹171.79 trillion against the provisional estimate of ₹160.06 trillion for FY23 released in May last year. The ministry estimates nominal GDP growth of 8.9% in FY24, lower than the 10.5% estimated in the union budget for this year. However, some economists expect India’s full-year economic growth to range closer to the RBI’s forecast of 7%, as government expenditure, which was high during the first eight months of the ongoing fiscal, is expected to slow down in the last quarter.

The government is essentially forecasting projections for FY24 based on the April-November 2023 data available to it, said economist Pronab Sen, a former chief statistician. “But we know the government expenditure can’t stay as high round the year as it was during the first eight months of the ongoing fiscal," Sen said. According to the first advance estimates, the Gross Fixed Capital Formation (GFCF), which represents the capital expenditure carried out by the government and private sectors, is expected to rise by 10.3% annually to ₹59.95 trillion during FY24.

GFCF had expanded 31% in the first eight months of this fiscal, and 11.4% in FY23. Private Final Consumption Expenditure (PFCE), or household spending—the biggest growth driver—is expected to rise at a moderate rate of 4.4% annually to ₹97.74 trillion this fiscal after 7.53% in the previous fiscal. Government spending is expected to rise 4% to ₹16.41 trillion this year.

Government Final Consumption Expenditure (GFCE) had remained flat in FY23 with a 0.13% annual growth. Meanwhile, trade deficit is expected to rise to ₹8.23 trillion during FY24, up from ₹3.36 trillion during the previous fiscal. Net exports, which is a growth driver, has been in negative territory in recent years, becoming